Homework Help is Here – Start Your Trial Now!
Business
Economics
Because the two countries produce more rye and more jeans 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 tabie. In the folowing table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Arcadia Dolorium Rye Jeans Rye Jeans (Millions of bushels) (MIllions of palrs) (MIllions of bushels) (Millions of pairs) Without Trade Production 48 15 20 Consumption 48 15 20 With Trade Production Trade action Exports 18 v Exports 54 ▼ Consumption Gains from Trade Increase in Consumption

Because the two countries produce more rye and more jeans 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 tabie. In the folowing table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Arcadia Dolorium Rye Jeans Rye Jeans (Millions of bushels) (MIllions of palrs) (MIllions of bushels) (Millions of pairs) Without Trade Production 48 15 20 Consumption 48 15 20 With Trade Production Trade action Exports 18 v Exports 54 ▼ Consumption Gains from Trade Increase in Consumption

Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter21: International Trade And Comparative Advantage
Section: Chapter Questions
Problem 2TY
See similar textbooks
icon
Related questions
Question

Please answer the all the blanks and the whole table. The trade action needs to be fixed as well.

Because the two countries produce more rye and more jeans 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 tabie. In the folowing table, enter this difference in the boxes across the last row (marked "Increase in Consumptio7 "). Arcadia Dolorium Rye Jeans Rye Jeans (Millions of bushels) (MIllions of palrs) (MIIlions of bushels) (Millions of pairs) Without Trade Production 48 15 20 Consumption 8 48 15 20 With Trade Prod ction Trade action Exports 18 ▼ Exports 54 ▼ Consumption Gains from Trade Increase in Consumption 0 0
Transcribed Image Text:Because the two countries produce more rye and more jeans 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 tabie. In the folowing table, enter this difference in the boxes across the last row (marked "Increase in Consumptio7 "). Arcadia Dolorium Rye Jeans Rye Jeans (Millions of bushels) (MIllions of palrs) (MIIlions of bushels) (Millions of pairs) Without Trade Production 48 15 20 Consumption 8 48 15 20 With Trade Prod ction Trade action Exports 18 ▼ Exports 54 ▼ Consumption Gains from Trade Increase in Consumption 0 0
3. Gains from trade Consider two neighboring island countries called Arcadia and Dolorium. They each have 4 million labor hours available per month that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Rye Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Arcadia 8 16 Dolorium 5 20 Initially, suppose Arcadia uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Dolorium uses 3 million hours of labor per month to produce rye and 1 million hours per month to produce jeans. Consequently, Arcadia produces 8 million bushels of rye and 48 million pairs jeans, and Dolorium produces 15 million bushels of rye and million pairs jeans. 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 rye and jeans it produces. Arcadia's opportunity cost of producing 1 bushel of rye is 2 pairs v of jeans, and Dolorium's opportunity cost of producing 1 bushel of rye is 4 pairs v of jeans. Therefore, Arcadla advantage in the production of jeans. has a comparative advantage in the production of rye, and Dolorium has a comparative 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 rye will produce |million bushels per month, and the country that produces jeans will produce million pairs per month. In the foliowing table, enter each country's production decision on the third row of the table (marked "Production"). Suppose the country that produces rye trades 18 million bushels of rye to the other country in exchange for 54 million pairs of jeans. In the folowing 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 finai consumption of each good on the ine marked "Consumption." When the two countries did not specialize, the total production of rye was 23 million bushels per month, and the total production of jeans was 68 million pairs per month. Because of specialization, the total production of rye has increased by million bushels per month, and the total production of jeans has increased by million pairs per month. Because the two countries produce more rye and more jeans under specialization, each country is able to gain from trade.
Transcribed Image Text:3. Gains from trade Consider two neighboring island countries called Arcadia and Dolorium. They each have 4 million labor hours available per month that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Rye Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Arcadia 8 16 Dolorium 5 20 Initially, suppose Arcadia uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Dolorium uses 3 million hours of labor per month to produce rye and 1 million hours per month to produce jeans. Consequently, Arcadia produces 8 million bushels of rye and 48 million pairs jeans, and Dolorium produces 15 million bushels of rye and million pairs jeans. 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 rye and jeans it produces. Arcadia's opportunity cost of producing 1 bushel of rye is 2 pairs v of jeans, and Dolorium's opportunity cost of producing 1 bushel of rye is 4 pairs v of jeans. Therefore, Arcadla advantage in the production of jeans. has a comparative advantage in the production of rye, and Dolorium has a comparative 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 rye will produce |million bushels per month, and the country that produces jeans will produce million pairs per month. In the foliowing table, enter each country's production decision on the third row of the table (marked "Production"). Suppose the country that produces rye trades 18 million bushels of rye to the other country in exchange for 54 million pairs of jeans. In the folowing 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 finai consumption of each good on the ine marked "Consumption." When the two countries did not specialize, the total production of rye was 23 million bushels per month, and the total production of jeans was 68 million pairs per month. Because of specialization, the total production of rye has increased by million bushels per month, and the total production of jeans has increased by million pairs per month. Because the two countries produce more rye and more jeans under specialization, each country is able to gain from trade.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 6 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Federal Reserve System
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Principles of Macroeconomics (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Economics
ISBN:
9781305971509
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Economics: Private and Public Choice (MindTap Cou…
Economics: Private and Public Choice (MindTap Cou…
Economics
ISBN:
9781305506725
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Microeconomics: Private and Public Choice (MindTa…
Microeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506893
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
Macroeconomics: Private and Public Choice (MindTa…
Macroeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506756
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS