Suppose that the UK is a small open country producing only cars and crude petroleum. For simplicity assume that cars and crude petroleum are labor-intensive and capital-intensive respectively. Now, suppose there is an inflow of workers from Eurozone to the UK. Using the theories we discussed in class, answer the following questions with proper arguments, equations, or graphs.

a.How would the wage in the UK change as a result of incoming workers? Why?

b.How would the capital rental rate in the UK change as a result of incoming workers? Why?

c. How would the production bundle change? Why?

d.Suppose by exiting EU open borders policy would stop. Now, given the fact that British people votedfor Brexit, determine whether the UK is a labor abundant country or a capital abundant country. Explain.

e.Would immigration imply a pro or anti trade production effect for the UK? Why?