Consider two neighboring island countries called Contente and Dolorium. They each have 4 million labor hours available per month that they can useto 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.JeansRyeCountry(Pairs per hour of labor)(Bushels per hour of labor)Contente816Dolorium5.20Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Doloriumuses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Contente produces 8 millionpairs 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 othercountries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye itproduces. 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 18 million pairs of jeans to the other country in exchange for 54 million bushels of rye.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 23 million pairs per month, and the total production of rye was 68 millionbushels per month. Because of specialization, the total production of jeans has increased bymillion pairs per month, and the total productionof rye has increased bymillion bushels per month.Because the two countries produce more jeans and more rye under specialization, each country is able to gain from trade.Calsuleta t

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 18 million pairs of jeans to the other country in exchange for 54 million bushels of rye. 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 23 million pairs per month, and the total production of rye was 68 million bushels per month. Because of specialization, the total production of jeans has increased by million pairs per month, and the total production of rye has increased by million bushels per month. Because the two countries produce more jeans and more rye under specialization, each country is able to gain from trade.

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 18 million pairs of jeans to the other country in exchange for 54 million bushels of rye. 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 23 million pairs per month, and the total production of rye was 68 million bushels per month. Because of specialization, the total production of jeans has increased by million pairs per month, and the total production of rye has increased by million bushels per month. Because the two countries produce more jeans and more rye under specialization, each country is able to gain from trade.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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