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Consider two neighboring island countries called Felicidad 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. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Felicidad 5 20 Arcadia 8 16 Initially, suppose Arcadia uses 1 million hours of labor per month 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, Felicidad produces 15 million pairs of jeans and 20 million bushels of corn, and Arcadia produces 8 million pairs of jeans and 48 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. Felicidad's opportunity cost of producing 1 pair of jeans is 4 bushels ▼ of corn, and Arcadia's opportunity cost of producing 1 pair of jeans is 2 bushels ▼ of corn. Therefore, Arcadia has a comparative advantage in the production of jeans, and Felicidad ▼ 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.

Consider two neighboring island countries called Felicidad 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. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Felicidad 5 20 Arcadia 8 16 Initially, suppose Arcadia uses 1 million hours of labor per month 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, Felicidad produces 15 million pairs of jeans and 20 million bushels of corn, and Arcadia produces 8 million pairs of jeans and 48 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. Felicidad's opportunity cost of producing 1 pair of jeans is 4 bushels ▼ of corn, and Arcadia's opportunity cost of producing 1 pair of jeans is 2 bushels ▼ of corn. Therefore, Arcadia has a comparative advantage in the production of jeans, and Felicidad ▼ 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.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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**Scenario Overview** Suppose a country that produces jeans trades 18 million pairs of jeans to another country in exchange for 54 million bushels of corn. **Task Instructions** In the following table, you are required to: 1. Select the amount of each good that each country exports and imports in the corresponding boxes under "Trade Action". 2. Calculate and enter each country’s final consumption of each good in the "Consumption" row. **Production Details** - Before specialization: - Total production of jeans: 23 million pairs per month. - Total production of corn: 68 million bushels per month. - After specialization: - Increase in production of jeans by ___ million pairs per month. - Increase in production of corn by ___ million bushels per month. **Objective** By specializing, both countries increase their production of jeans and corn, allowing them to benefit from trade. **Calculate Gains from Trade** Determine the increase in consumption for each good as a result of trade, compared to the initial scenario. **Data Table:** | | | **Felicidad** | | | **Arcadia** | | |--------------------------------|--------------|-----------------------|-----------|--------------|-----------------------|-----------| | | | **Jeans** | **Corn** | | **Jeans** | **Corn** | | | | *(Millions of pairs)* | *(Millions of bushels)* | | *(Millions of pairs)* | *(Millions of bushels)* | | **Without Trade** | Production | 15 | 20 | Production | 8 | 48 | | | Consumption | 15 | 20 | Consumption | 8 | 48 | | **With Trade** | Production | | | Production | | | | | Trade Action | | | Trade Action | | | | | Consumption | | | Consumption | | | | **Gains from Trade** | | | | | | | | Increase in Consumption | | | | | | | Complete the table by comparing consumption changes due to trade, highlighting the economic gains achieved through specialization and exchange.
Transcribed Image Text:**Scenario Overview** Suppose a country that produces jeans trades 18 million pairs of jeans to another country in exchange for 54 million bushels of corn. **Task Instructions** In the following table, you are required to: 1. Select the amount of each good that each country exports and imports in the corresponding boxes under "Trade Action". 2. Calculate and enter each country’s final consumption of each good in the "Consumption" row. **Production Details** - Before specialization: - Total production of jeans: 23 million pairs per month. - Total production of corn: 68 million bushels per month. - After specialization: - Increase in production of jeans by ___ million pairs per month. - Increase in production of corn by ___ million bushels per month. **Objective** By specializing, both countries increase their production of jeans and corn, allowing them to benefit from trade. **Calculate Gains from Trade** Determine the increase in consumption for each good as a result of trade, compared to the initial scenario. **Data Table:** | | | **Felicidad** | | | **Arcadia** | | |--------------------------------|--------------|-----------------------|-----------|--------------|-----------------------|-----------| | | | **Jeans** | **Corn** | | **Jeans** | **Corn** | | | | *(Millions of pairs)* | *(Millions of bushels)* | | *(Millions of pairs)* | *(Millions of bushels)* | | **Without Trade** | Production | 15 | 20 | Production | 8 | 48 | | | Consumption | 15 | 20 | Consumption | 8 | 48 | | **With Trade** | Production | | | Production | | | | | Trade Action | | | Trade Action | | | | | Consumption | | | Consumption | | | | **Gains from Trade** | | | | | | | | Increase in Consumption | | | | | | | Complete the table by comparing consumption changes due to trade, highlighting the economic gains achieved through specialization and exchange.
# Gains from Trade Consider two neighboring island countries called Felicidad 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. | Country | Jeans (Pairs per hour of labor) | Corn (Bushels per hour of labor) | |------------|--------------------------------|----------------------------------| | Felicidad | 5 | 20 | | Arcadia | 8 | 16 | Initially, suppose Arcadia 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, Felicidad produces 15 million pairs of jeans and 20 million bushels of corn, and Arcadia produces 8 million pairs of jeans and 48 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. Felicidad's opportunity cost of producing 1 pair of jeans is **4 bushels** of corn, and Arcadia's opportunity cost of producing 1 pair of jeans is **2 bushels** of corn. Therefore, **Arcadia** has a comparative advantage in the production of jeans, and **Felicidad** 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.
Transcribed Image Text:# Gains from Trade Consider two neighboring island countries called Felicidad 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. | Country | Jeans (Pairs per hour of labor) | Corn (Bushels per hour of labor) | |------------|--------------------------------|----------------------------------| | Felicidad | 5 | 20 | | Arcadia | 8 | 16 | Initially, suppose Arcadia 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, Felicidad produces 15 million pairs of jeans and 20 million bushels of corn, and Arcadia produces 8 million pairs of jeans and 48 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. Felicidad's opportunity cost of producing 1 pair of jeans is **4 bushels** of corn, and Arcadia's opportunity cost of producing 1 pair of jeans is **2 bushels** of corn. Therefore, **Arcadia** has a comparative advantage in the production of jeans, and **Felicidad** 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.
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