Consider two neighboring island countries called Contente and Euphoria. They each have 4 million labor hours available per month that they can useto produce corn, jeans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using 1 hour of labor.olsCornJeansCountry(Bushels per hour of labor)(Pairs per hour of labor)Contente16A-ZEuphoria20Initially, suppose Contente uses 1 million hours of labor per month to produce corn and 3 million hours per month to produce jeans, while Euphoriauses 3 million hours of labor per month to produce corn and 1 million hours per month to produce jeans. Consequently, Contente producesmillionbushels of corn and 48 million pairs of jeans, and Euphoria produces 15 million bushels of corn and 20 million pairs of jeans. Assume there are noother countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of corn and jeansit produces.▼ of jeans, and Euphoria's opportunity cost of producing 1 bushel of corn isv has a comparativeContente's opportunity cost of producing 1 bushel of corn isv of jeans. Therefore,has a comparative advantage in the production of corn, andadvantage in the production of jeans.Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. Inmillion bushels per month, and the country that produces jeans will producethis case, the country that produces corn will producemillion pairs 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 corn trades 18 million bushels of corn to the other country in exchange for 54 million pairs of jeans.MacBook AirF12FIF10 HomeSuppose the country that produces corn trades 18 million bushels of corn to the other country in exchange for 54 million pairs of jeans.arsescalog and Study ToolsIn the following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," andenter each country's final consumption of each good on the line marked "Consumption."ntal OptionsWhen the two countries did not specialize, the total production of corn was 23 million bushels per month, and the total production of jeans was 68pllege Success Tipsmillion pairs per month. Because of specialization, the total production of corn has increased by9 million bushels per month, and the totalproduction of jeans has increased by12 million pairs per month.areer Success TipsBecause the two countries produce more corn and more jeans under specialization, each country is able to gain from trade.MENDED FOR YOUCalculate 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 thetable. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption").ng Safe on SocialvorksContenteEuphoriaCornJeansCornJeans(Millions of bushels) (Millions of pairs) (Millions of bushels)(Millions of pairs)HelpWithout TradeProduction8.481520Q Give Feedback15Consumption8.4820With Trade3280ProductionImports 54 vExports 18 YExports 54 ▼Trade actionExports 18 v18541826ConsumptionGains from Trade636.10Increase in ConsumptionMacBook Air4)FI1F10F8F9F7

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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 corn, jeans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using 1 hour of labor. Corn Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Contente 16 Euphoria 20 Initially, suppose Contente uses 1 million hours of labor per month to produce corn and 3 million hours per month to produce jeans, while Euphoria uses 3 million hours of labor per month to produce corn and 1 million hours per month to produce jeans. Consequently, Contente produces 8 million bushels of corn and 48 million pairs of jeans, and Euphoria produces 15 million bushels of corn and 20 million pairs of 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 corn and jeans it produces. v of jeans, and Euphoria's opportunity cost of producing 1 bushel of corn i v has a comparative Contente's opportunity cost of producing 1 bushel of corn is has a comparative advantage in the production of corn, and v of jeans. Therefore, advantage in the production of jeans. it has a comparative advantage, producing only that good. In

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC