Choose one of the given trade models in (a), (b) or (c) to explain each of the following phenomena. Justify your choice in one or two sentences, using the assumptions and/or results of the model. Using a graph, show the price (or relative price) of the import good in the importing country before and after trade.

An industry is better able to compete internationally after a period of trade protection (i.e. after a period of tariffs that protect its domestic industry from competition).

a) Monopolistic Competition

b) Ricardian model

c) External economies of scale