Homework Ch 03 Consider Two Neighboring Island Countries Called Felicidad And Arcadia They Each Have 4 Million Labor 1 (35.13 KiB) Viewed 47 times
Homework Ch 03 Consider Two Neighboring Island Countries Called Felicidad And Arcadia They Each Have 4 Million Labor 2 (27.5 KiB) Viewed 47 times
Homework Ch 03 Consider Two Neighboring Island Countries Called Felicidad And Arcadia They Each Have 4 Million Labor 3 (19.5 KiB) Viewed 47 times
Homework (Ch 03) Consider two neighboring island countries called Felicidad and Arcadia. They each have 4 million labor hours available per month that they can use to produce jeans, com, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. ols Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Felicidad 16 Arcadia 12 Initially, suppose Arcadia uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce comm, while Felicided uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce com. Consequently, Felicidad produces 12 million pairs of jeans and 16 million bushels of com, and Arcadia produces 6 million pairs of jeans and 36 million bushels of corn. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of jeans and corn it produces Felicidad's opportunity cost of producing 1 pair of jeans is of com, and Arcadia's opportunity cost of producing 1 pair of jeans is has a comparative advantage in the production of jeans, and has a comparative of com. Therefore, advantage in the production of com Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producing only that good. In this case, the country that produces jeans will produce milion pairs per month, and the country that produces corn will produce million bushels per month. In the following table, enter each country's production decision on the third row of the table (marked "Production"). -
ols 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," 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 18 million pairs per month, and the total production of corn was 52 million bushels per month. Because of specialization, the total production of jeans has increased by million pairs per month, and the total production of corn has increased by million bushels per month. Because the two countries produce more jeans and more com under specialization, each country is able to gain from trade. Calculate the pains from trade-that is, the amount by which each country has increased its consulation 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. Felicidad Arcadia Jeans Corn Jeans Corn (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) Without Trade Production 12 36 Consumption 12 36
Without Trade Production Consumption With Trade Production Trade action Consumption Gains from Trade Increase in Consumption. Felicidad Arcadia Jeans Corn Jeans Corn (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) 12 16 36 12 16 36 Grade It Now Save & Continue Continue without saving
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