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," andenter 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 millionbushels per month. Because of specialization, the total production of jeans has increased bymillion pairs per month, and the total productionof corn has increased bymillion 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 thetable. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption").ContenteFelicidadJeansCornJeansCorn(Millions of pairs)(Millions of bushels)(Millions of pairs)(Millions of bushels)Without TradeProduction6.361216Consumption361216With TradeProductionTrade actionConsumptionGains from TradeIncrease in Consumption 3. Gains from tradeConsider two neighboring island countries called Contente and Felicidad. They each have 4 million labor hours available per month that they can use toproduce 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.JeansCornCountry(Pairs per hour of labor)(Bushels per hour of labor)Contente612Felicidad416Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Felicidaduses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Contente produces 6 millionpairs of jeans and 36 million bushels of corn, and Felicidad produces 12 million pairs of jeans and 16 million bushels of corn. 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 jeans and cornit produces.Contente's opportunity cost of producing 1 pair of jeans isof corn, and Felicidad's opportunity cost of producing 1 pair of jeans isof corn. Therefore,has a comparative advantage in the production of jeans, andhas a comparativeadvantage 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. Inthis case, the country that produces jeans will producemillion pairs per month, and the country that produces corn will producemillion 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.

A country has a comparative advantage in manufacturing that good if the opportunity cost of…

following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," and each country's final consumption of each good on the line marked "Consumption." 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 Is per month. Because of specialization, the total production of jeans has increased by n has increased by million pairs per month, and the total production million bushels per month. use the two countries produce more jeans and more corn under specialization, each country is able to gain from trade. late 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 In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Contente Felicidad Jeans Corn Jeans Corn (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) thout Trade Production 6. 36 12 16 Consumption 6. 36 12 16

following table, select the amount of each good that each country exports and imports in the boxes across the row marked "Trade Action," and each country's final consumption of each good on the line marked "Consumption." 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 Is per month. Because of specialization, the total production of jeans has increased by n has increased by million pairs per month, and the total production million bushels per month. use the two countries produce more jeans and more corn under specialization, each country is able to gain from trade. late 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 In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Contente Felicidad Jeans Corn Jeans Corn (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) thout Trade Production 6. 36 12 16 Consumption 6. 36 12 16

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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