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 17 million pairs per week, and the total production of rye was 46 millionbushels per week. Because of specialization, the total production of jeans has increased bymillion pairs per week, and the total production ofrye has increased bymillion bushels per week.Because the two countries produce more jeans and more rye 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").Arcadia´DoloriumJeansRyeJeansRye(Millioof pairs)(Millions of bushels)(Millions of pairs)(Millions of bushels)Without Trade301216Production5301612ConsumptionWith TradeProductionTrade actionConsumptionGains from TradeWOPXOIncrease in ConsumptionPs17MacBook Air 3. Gains from tradeConsider two neighboring island countries called Dolorium and Arcadia. They each have 4 million labor hours available per week that they can use toproduce 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)Dolorium416Arcadia5.10Initially, suppose Arcadia uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce rye, while Dolorium uses 3million hours of labor per week to produce jeans and 1 million hours per week to produce rye. Consequently, Dolorium produces 12 million pairs ofjeans and 16 million bushels of rye, and Arcadia produces 5 million pairs of jeans and 30 million bushels of rye. Assume there are no other countrieswilling to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and rye it produces.

Given: Jeans Rye Dolorium 4 16 Arcadia 5 10 Note: Data for production of jeans and rye…

When the two countries did not specialize, the total production of jeans was 17 million pairs per week, and the total production of rye was 46 million bushels per week. Because of specialization, the total production of jeans has increased by million pairs per week, and the total production of rye has increased by million bushels per week. Because the two countries produce more jeans and more rye 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"). Arcadia ´Dolorium Jeans Rye Jeans Rye (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) Without Trade 30 12 16 Production 30 16 12 Consumption With Trade Production Trade action

When the two countries did not specialize, the total production of jeans was 17 million pairs per week, and the total production of rye was 46 million bushels per week. Because of specialization, the total production of jeans has increased by million pairs per week, and the total production of rye has increased by million bushels per week. Because the two countries produce more jeans and more rye 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"). Arcadia ´Dolorium Jeans Rye Jeans Rye (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) Without Trade 30 12 16 Production 30 16 12 Consumption With Trade Production Trade action

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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