3. Gains from trade Consider two neighboring island countries called Dolorium and Arcadia. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor.
Initially, suppose Arcadia uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Dolorium uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Dolorium produces 12 million pairs of jeans and 16 million bushels of corn, and Arcadia produces 6 million pairs of jeans and 36 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and corn it produces. Dolorium's opportunity cost of producing 1 pair of jeans is................bushels of corn, and Arcadia's opportunity cost of producing 1 pair of jeans is................. bushels of corn. Therefore,................ has a comparative advantage in the production of jeans, and............ has a comparative advantage in the production of corn. Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces jeans will produce...................million pairs per month, and the country that produces corn will produce.........million bushels per month.In the following table, enter each country's production decision on the third row of the table (marked "Production"). Suppose the country that produces jeans trades 14 million pairs of jeans to the other country in exchange for 42 million bushels of corn. In the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," and enter each country's final consumption of each good on the line marked "Consumption." When the two countries did not specialize, the total production of jeans was 18 million pairs per month, and the total production of corn was 52 million bushels per month. Because of specialization, the total production of jeans has increased by.............................million pairs per month, and the total production of corn has increased by......................million bushels per month.Because the two countries produce more jeans and more corn under specialization, each country is able to gain from trade. Calculate the gains from trade—that is, the amount by which each country has increased its consumption of each good relative to the first row of the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption").
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3. Gains from trade Consider two neighboring island countries called Dolorium and Arcadia. They each have...
3. Gains from trade Consider two neighboring island countries called Bellissima and Dolorium. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Country Bellissima Dolorium Jeans (Pairs per hour of labor) 12 Corn (Bushels per hour of labor) 24 Initially, suppose Bellissima uses 1 million hours of...
3. Gains from trade Consider two neighboring island countries called Euphoria and Arcadia. They each have 4 million labor hours available per month that they can use to produce corn, eans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using hour of abo Corn Jeans (Pairs per hour of labor) 20 16 (Bushels per hour of labor) Country Euphoria Arcadia 8 Initially, suppose Arcadia uses 1 million hours of...
3. Gains from trade Consider two neighboring island countries called Arcadia and Euphoria. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans (Pairs per hour of labor) Corn (Bushels per hour of labor) Country Arcadia Euphoria in 16 + Initially, suppose Arcadia uses 1 million hours...
3. Gains from trade Consider two neighboring island countries called Dolorium and Contente. They each have 4 milion labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn (Bushels per hour of labor) Country Dolorium Contente (Pairs per hour of labor) 8 Initially, suppose Contente uses 1 million hours of labor...
3. Gains from trade Consider two neighboring island countries called Arcadia and Euphoria. They each have 4 million labor hours available per week that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Arcadia Euphoria 8 16 20 Initially, suppose Arcadia uses 1 million hours...
2. Gains from trade Consider two neighboring island countries called Felicidad and Arcadia. They each have 4 million labor hours available per week that they can use to produce jeans, corn, or combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn (Pairs per hour of labor) (Bushels per hour of labor) Country Felicidad 8 32 Arcadia 12 24 Initially, suppose Arcadia uses 1 million hours...
3. Gains from trade Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Jeans Rye (Bushels per hour of labor) 20 16 (Pairs per hour of labor) Country Dolorium Contente Initially, suppose Contente uses 1 million hours of...
3. Gains from trade Consider two neighboring island countries called Felicidad and Arcadia. They each have 4 million labor hours available per week that they can use to produce jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. Jeans (Pairs per hour of labor) Rye (Bushels per hour of labor) Country Felicidad Arcadia 12 Initially, suppose Arcadia uses 1 million hours of labor...
3. Gains from trade Consider two neighbouring island countries called Dolorium and Bellissima. They each have 4 million labour hours available per week that they can use to produce corn, jeans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using one hour of labour. Country Dolorium Corn (Bushels per hour of labour) 5 Jeans (Pairs per hour of labour) 20 Bellissima 8 16 Initially, suppose Bellissima uses 1 million...
3. Comparative advantage and gains from trade Consider two neighboring island countries called Arcadia and Felicidad. They each have 4 million labor hours available per week that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor Jeans Corn Country Pairs per hour of labor) (Bushels per hour of labor) Arcadia Felicidad 12 24 8 32 Initially, suppose Arcadia...