QUESTION 3

1. Using a production possibilities frontier, indifference curves, and relative price lines, show how trade improves the wellbeing of an importing country [ 5 marks]
2. Using a production possibilities frontier, indifference curves, and relative price lines, show how trade improves the wellbeing of an exporting country [ 5 marks]
3. What is the relationship between wages and the marginal product of labour? [ 3 marks]
4. Explain how immigration is likely to affect wages and the marginal product of capital? [ 5 marks]