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 Contente 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 Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 16 Euphoria 20 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Euphoria uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Contente produces 8 million pairs of jeans and 48 million bushels of corn, and Euphoria produces 15 million pairs of jeans and 20 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…Consider two neighboring island countries called Contente and Dolorium. They each have 4 million labor hours available per month 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 Country (Pairs per hour of labor) (Bushels per hour of labor) Contente 8 16 Dolorium 20 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Dolorium uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Contente produces 8 million pairs of jeans and 48 million bushels of rye, and Dolorium produces 15 million pairs of jeans and 20 million bushels of rye. 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 rye it produces. Contente's…As you did for Freedonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. Sylvania 80 70 Consumption After Trade 60 PPF 50 40 30 20 10 20 30 40 50 60 70 80 LEMONS (Millions of pounds) True or False: Without engaging in international trade, Freedonia and Sylvania would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) O True O False TEA (Millions of pounds)
- 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 17 million pairs per week, and the total production of rye was 46 million bushels per week. Because of specialization, the total production of jeans has increased by million pairs per week, and the total production of rye has increased by million bushels per week. Because the two countries produce more jeans and more rye 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"). Arcadia ´Dolorium Jeans Rye…3. Comparative advantage and gains from trade Consider two neighboring island countries called Bellissima and Felicidad. 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 Felicidad Jeans Corn (Pairs per hour of labor) (Bushels per hour of labor) 8 16 5 20 Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Felicidad uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Bellissima produces 8 million pairs of jeans and 48 million bushels of corn, and Felicidad produces 15 million pairs of jeans and 20 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…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 table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Euphoria Contente Rye (Millions of bushels) Jeans (Millions of pairs) Rye (Millions of bushels) Jeans (Millions of pairs) Without Trade Production 15 20 8 48 Consumption 15 20 8 48 With Trade Production Trade action Consumption Gains from Trade Increase in Consumption
- In the following table, enter each country's production decision on the third row of the table (labeled "Production"). Contente Euphoria Rye Jeans Rye Jeans (Millions of bushels) (Millions of pairs) (Millions of bushels) (Millions of pairs) Without Trade Production 48 15 20 Consumption 8 48 15 20 With Trade Production Imports/Exports Consumption Gains from Trade Increase in Consumption 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 previous table, use the dropdown menus across the row labeled "Imports/Exports" to select the amount of each good that each country imports and exports. Then enter each country's final consumption of each good on the line labeled "Consumption." When the two countries did not specialize, the total production of rye was 23 million bushels per week, and the total production of jeans was 68 million pairs per week. Because of specialization, the total production of rye…Germany can produce either 40 units of pretzels or 20 units of cars per labour hour. Canada can produce either 61 units of pretzels or 14 units of cars per labour hour. Suppose Canada follows its comparative advantage in deciding what to produce and trade with Germany at a trade price of 0.34 units of cars for one unit of pretzel. For every 5050 units of the goods that Canada produces and trades with Germany, what are the gains from trade in terms of the other goods?France can produce either 50 units or 80 units of wine per labour hour. Canada can produce either 87 units of cheese or 49 units of wine per labour hour. Suppose Canada follows its competitive advantages in deciding what to produce and trade with France at a trade of wine per unit of cheese. For every 3500 units of goods that Canada produces and trades with France, what are the gains from trade in terms of the other goods?
- The United States has an absolute advantage in producing sugar over all of the other sugar producing countries. Does this fact mean that we should not import any sugar from the other countries?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 Activity Frame 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 pistachios was 23 million pounds per week, and the total production of chinos was 68 million pairs per week. Because of specialization, the total production of pistachios has increased by million pounds per week, and the total production of chinos has increased by million pairs per week. Because the two countries produce more pistachios and more chinos 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…We have export and import data of a country for the last two years. In addition, let's assume that we have the list of the most exported goods along with the countries that this country exports and imports to. How do we know if the trade pattern of this country is compatible with the comparative advantage theory? Also, what data do we need if we want to assess whether this country's trade pattern can be explained by the Hecksher-Ohlin theory?
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