Suppose that a free-trade equilibrium exists in a two-country, two-good, two-factor world. Assume that the two goods, Artificial Intelligence Services (S) and Cloth (C), both employ skilled and unskilled workers, and that both factors are perfectly mobile across sectors. Also assume that:

• The United States is relatively skilled labor-abundant
• Mexico is relatively unskilled labor-abundant.
• Artificial Intelligence Services are relatively skilled labor-intensive.
• Cloth is relatively unskilled labor-intensive.

Assuming that the pattern of trade does not change,indicate the effect of an increase in the population of skilled labor in the US on:

(a) The US and worldRScurves for cloth.(Shift to the right or Shift to the left?)

(b) Real wage of skilled workers in MX. (Increase or Decrease?)

(c) World relative price of cloth (Pc/Ps). (Increase or Decrease?)

(d) MX's terms of trade. (Increase or Decrease?)

(e) Aggregate welfare in MX. (Increase or Decrease?)

(f) (L_S/L_u) in the cloth sector. (Increase or Decrease?)

(g) The US's terms of trade. (Increase or Decrease?