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 36 million pairs per week, and the total production of corn was 104 million bushels per week. Because of specialization, the total production of jeans has increased by million pairs per week, and the total production of corn has increased by million bushels per week. 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 the table. In the following table, enter this difference in the boxes across the last row (marked “Increase in Consumption”). Country Jeans Corn Felicidad 8 32 Bellissima 12 24 FELICIDAD BELLISSIMA Jeans Corn Jeans Corn Without Trade Production 24 32 12 72 Consumption 24 32 12 72 With Trade Production Trade action Imports 26 / EXPORTS 26 IMPORT 78/Exports 78 IMPORT 26/Exports 26 Imports78 /EXPORTS 78 Consumption Gains from Trade Increase in Consumption

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 36 million pairs per week, and the total production of corn was 104 million bushels per week. Because of specialization, the total production of jeans has increased by ______________million pairs per week, and the total production of corn has increased by ______________million bushels per week.

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 the table. In the following table, enter this difference in the boxes across the last row (marked “Increase in Consumption”).

Country	Jeans	Corn

Felicidad	8	32
Bellissima	12	24

FELICIDAD BELLISSIMA


Jeans	Corn	Jeans	Corn

Without Trade
Production	24	32	12	72
Consumption	24	32	12	72
With Trade
Production
Trade action	Imports 26 / EXPORTS 26	IMPORT 78/Exports 78	IMPORT 26/Exports 26	Imports78 /EXPORTS 78
Consumption
Gains from Trade
Increase in Consumption

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