Question 1 10 marks (2+3+2+3) Answer whether the following statements are true or false. Justify you answer. 3. Consider the following representation of the Ricardian Model. Two countries, India and Vietnam, produce two products - tea and garments. Total labour supply in India is 48 and the total labour supply in Vietnam is 60. The table provides the unit-labour requirements () to produce tea and garments in each country. Vietnam Tea Garments 48 1 6 While India has the absolute advantage in producing tea, Vietnam has the absolute advantage in producing garments. Hence, India should export tea and Vietnam should export garments. (1 mark) True or False? (1 marks) Explain. b. Consider the Ricardian Model displayed in point a). India has the comparative advantage in producing tea, while Vietnam has the comparative advantage in producing garments. (1 mark) True or False? (2 marks) Explain. c. It is conceivable that a country with an industry that exhibits external economies of scale, which the established advantage, would benet by moving away from free international trade. (1 mark) True or False? (1 mark) Explain. d. Consider a monopolistically competitive industry where rms differ in productivity levels. When the industry opens to international trade, transportation and other transaction costs may determine which firms will remain exclusively in the local market and which rms will become exporters. (1 mark) True or False? (2 mark) Explain with the support of a graph