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a. (3 marks) Consider the following representation of the Ricardian Model. Two countries, Australia and...

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a. (3 marks) Consider the following representation of the Ricardian Model. Two countries, Australia and Cambodia, both produce two products - rice and paper. Total labour supply in Australia is 300 and the total labour supply in Cambodia is 300. The table provides the marginal product of labour () to produce cars and paper in each country. Australia Cambodia 15 6 Rice 4 Paper 2 e. (3 marks) The two key variables of the Gravity Model are the countries' economic size and the geographical distance between trade partners. Because geographical distance between trade partners is associated with transportation costs, the Gravity Model is not very effective in predicting trade volumes of services between countries. True or False? Explain

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