1. In 1986, the price of oil on world markets dropped sharply. Since the United States is an oil-importing country, this was widely regarded as good for the U.S. economy. Yet in Texas and Louisiana, 1986 was a year of economic decline. Why?

2. Using the numerical example in problem 5, assume now that Foreign limits immi-gration so that only two workers can move there from Home. Calculate how the movement of these two workers affects the income of five different groups:
a. Workers who were originally in Foreign
b. Foreign landowners
c. Workers who stay in Home
d. Home landowners
e. The workers who do move

3. Studies of the effects of immigration into the United States from Mexico tend to find that the big winners are the immigrants themselves. How might things change if the border were open, with no restrictions on immigration?