Some estimates are that immigration has increased the US labor force by 10%. Assume that the labor supply native and immigrant workers are both completely inelastic. Also assume that the elasticity of labor demand in the US is -0.2 and that labor’s share of GDP is .65.      

a) By what percent will the wage rate of native workers fall?

b) By what percent of GDP will the incomes of all US natives change?

c) Draw and label a supply and demand diagram to show these changes.