1. Consider the following data on the factor endowments of two countries: United States India Labor Force (Millions of Workers) 163 520 Capital Stock {Trillions of USD worth) 51 21 a. Which country is relatively capital abundant? Explain. b. Which country is relatively labor abundant? Explain. c. Suppose that microprocessors are a capital-intensive good relative to textiles. Which country will have comparative advantage in the production of textiles? d. Draw the production possibilities frontiers for each country. Why are they shaped the way they are? Assuming that consumer preferences in each country are the same, add indifference curves and relative price lines {without trade) to your PPF graphs. e. Allowing for trade between countries, redraw the graphs and include a \"trade triangle\" for each country. Identify and label the vertical and horizontal sides of the triangles as either imports or exports. Also, show the world market for microprocessors and label all prices. f. Consider the United States after trade opens up with India. What will happen to the capital intensity of production in the capital intensive good? What happened to the capital intensity of production in the labor intensive good? g. Describe the changes to real returns in the United States when trade opens up. Is trade good? 2. In the trade equilibrium you analyzed above, assume immigration takes place. Specically, suppose the labor force in the US increases by LIL, but the pattern of comparative advantage does not change. a. Show the new world trade equilibrium. Explain how production and consumption of both goods change. b. Show how much labor and capital usage in each industry reallocate. c. Analyze the aggregate welfare effects of immigration (Is immigration good?)