1. Show what happens to producer surplus, worker surplus and the gains from trade as workers migrate from a low- wage to a high- wage region.

2. What happens to wages and employment if the government imposes a payroll tax on a monopsonist? Compare the response in the monopsonistic market to the response that would have been observed in a competitive labor market

3. Prepaid college tuition plans, also known as Prepaid Education Arrangements (PEAs), allow you to prepay college tuition at present-day prices. The value of the investment is guaranteed by the state to cover college tuition, regardless of its future cost. You are considering the purchase of an education certicate for $25,000, which will cover the future tuition costs of your 8-year old daughter. You expect the tuition cost of your daughter's bachelor's degree to be $50,000 in 10 years. What would your personal discount rate need to be in order for it to be worthwhile for you to make the investment and purchase the certicate?

4. Some politicians in countries that are the recipients of large numbers of immigrants advocate adopt-ing laws requiring immigrants to learn the local language within a specied period of time. One economist, commenting on such a proposed law, said the following: \These laws are unnecessary, as the market provides incentives to learn the local language." Use the human capital model theory to describe the likely mechanism provided by the labor market to learn the local language. Analyze the characteristics of immigrants who are most likely to learn the new language. [Note: Relate each of these four characteristics with one of the terms appearing on the PV formula]