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...

Consider a monopolistically competitive industry where firms 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 firms will become exporters.
a) True or False?
b) Explain with the support of a graph.

Extracted text: 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. India Vietnam Tea 120 32 Garments 48 16