Suppose France and Portugal produce only cloth and wine. Assume that each country uses only labor to produce each good, and that the cloth and wine made in France and Portugal are exactly alike. The table below shows how much each country can produce of each good with one hour of labor: Output per Hour of Labor Cloth 23 Wine 12 France Portugal 4 6 Suppose that France and Portugal do not trade with each other. Each has 500 hours of labor with which to produce cloth and wine, and the countries are currently producing amounts of each good shown in the table below: Consumption with 500 Hours of Labor Wine 600 2,100 Cloth 10,350 France Portugal 600 Assume now that each country specializes in producing that good in which it has a comparative advantage. Further, assume for simplicity that one unit of cloth can be traded for one unit of wine. If France trades 600 units of cloth for 600 units of wine with Portugal, then, with trade, France will be able to consume the same amount of wine andO additional units of cloth. (enter a numeric response using an integer)
Suppose France and Portugal produce only cloth and wine. Assume that each country uses only labor to produce each good, and that the cloth and wine made in France and Portugal are exactly alike. The table below shows how much each country can produce of each good with one hour of labor: Output per Hour of Labor Cloth 23 Wine 12 France Portugal 4 6 Suppose that France and Portugal do not trade with each other. Each has 500 hours of labor with which to produce cloth and wine, and the countries are currently producing amounts of each good shown in the table below: Consumption with 500 Hours of Labor Wine 600 2,100 Cloth 10,350 France Portugal 600 Assume now that each country specializes in producing that good in which it has a comparative advantage. Further, assume for simplicity that one unit of cloth can be traded for one unit of wine. If France trades 600 units of cloth for 600 units of wine with Portugal, then, with trade, France will be able to consume the same amount of wine andO additional units of cloth. (enter a numeric response using an integer)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:**Title: Comparative Advantage and Trade between France and Portugal**
**Introduction:**
Consider a simplified global economy where France and Portugal produce only cloth and wine. Each country employs only labor for production, and the quality of cloth and wine produced is identical between the two nations. The focus is on how much each country can produce of each good using one hour of labor.
**Production Capabilities:**
- **Output per Hour of Labor:**
- **France:**
- Cloth: 23 units
- Wine: 12 units
- **Portugal:**
- Cloth: 4 units
- Wine: 6 units
These figures depict the productivity levels of each country in terms of producing cloth and wine with one hour of labor.
**Current Production Without Trade:**
- Both France and Portugal have 500 hours of labor dedicated to production.
- **Consumption with 500 Hours of Labor:**
- **France:**
- Cloth: 10,350 units
- Wine: 600 units
- **Portugal:**
- Cloth: 600 units
- Wine: 2,100 units
This scenario assumes that neither country engages in trade and utilizes its labor according to the given productivity.
**Specialization and Trade:**
The principle of comparative advantage suggests that each country should specialize in the good where it has a relative efficiency. This means France should focus on producing cloth, and Portugal should specialize in wine.
- **Assumed Trade Exchange:**
- 1 unit of cloth is traded for 1 unit of wine.
- **Trade Implications for France:**
- If France trades 600 units of cloth for 600 units of wine with Portugal, it will maintain its level of wine consumption while gaining additional cloth.
**Question:**
- Calculate the additional units of cloth France can consume after this trade.
_Insert a numeric response using an integer._
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