Please answer the question.

State whether the following statements are True or False and explain your answer. (2 marks each) a) The main insight from the Ricardian model is that export competitiveness is determined by relative unit labour cost, which is in turn driven by the relative wage and labour productivity. Consider the following information for questions bl through d). New Zealand is a small open economy with two sectors, Agriculture and Machinery. b) Suppose that capital is specic to Agriculture and Machinery. In other words, capital cannot move across the two sectors. Labour is mobile between the two sectors. A decrease in the price of the agricultural good will make labour unambiguously better off, but capital owners in Machinery unambiguously worse off. c) Now suppose that labour and capital are both mobile between the two sectors. Agriculture is labour intensive, while Machinery is capital intensive. A decrease in the price of the agricultural good will make labour worse off and capital owners better off. d) Maintaining the assumptions that labour and capital are both mobile between the two sectors, Agriculture is labour intensive and Machinery is capital intensive, an increase in foreign investment from abroad is most likely to increase the return to capital in New Zealand. e) An export subsidy leads to greater welfare losses in a small country relative to a large country. f) The only contribution of the Krugman (1979) model of trade is that it considers the implication of increasing returns to scale in production. g) An import quota is always strictly worse for welfare than an import tariff for a small country