The figure below displays the marginal product of capital (MPK) curves of two countries, Canada and Mexico. The total capital stock in the two countries combined is 10,000 units, 8,000 of which is owned by Canada. The Canadian capital stock is measured from left to right; the Mexican capital stock is measured from right to left. 

Based on the information in the figure and starting from a situation with no international capital flows, describe how capital mobility between the two countries will affect output and net national welfare in Mexico. Answer this question by pointing out the correct ‘areas’ in the above figure corresponding to the changes in output and net welfare.

10.5 10 9.5 9 8.5 8 75 7 6.5 6 5.5 5 45 4 3.5 3 2.5 2 1.5 1 0.5 0 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 5500 6000 6500 7000 7500 8000 8500 9000 9500 10000 MPK Canada MPK Mexico 10.5 10 9.5 9 8.5 8 75 7 6.5 6 5.5 S 4.5 4 3.5 3 25 2. 1.5 1 0.5 0