Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available p

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Consider Two Neighboring Island Countries Called Dolorium And Contente They Each Have 4 Million Labor Hours Available P 1 (36.34 KiB) Viewed 9 times

Consider Two Neighboring Island Countries Called Dolorium And Contente They Each Have 4 Million Labor Hours Available P 2 (43.2 KiB) Viewed 9 times

Consider Two Neighboring Island Countries Called Dolorium And Contente They Each Have 4 Million Labor Hours Available P 3 (37.99 KiB) Viewed 9 times

Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per month that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor. Jeans Corn Country (Pairs per hour of labor) (Bushels per hour of labor) Dolorium 32 Contente 24 12 Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Dolorium uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Dolorium produces 24 million pairs of jeans and 32 million bushels of corn, and Contente produces 12 million pairs of jeans and 72 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. Dolorium's opportunity cost of producing 1 pair of jeans is of corn. Therefore, advantage in the production of com. of corn, and Contente's opportunity cost of producing 1 pair of jeans is has a comparative advantage in the production of Jeans, and has a comparative

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 million 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 (labeled "Production"). Contente Without Trade Production Consumption With Trade Production Imports/Exports Consumption Gains from Trade Increase in Consumption Dolorium Jeans Corn Jeans Corn (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) 24 24 32 12 12 몸 72 72 4

7 Suppose the country that produces jeans trades 26 million pairs of jeans to the other country in exchange for 78 million bushels of com. In the previous table, use the dropdown menus across the row labeled "Imports/Exports to select the amount of each good that each country imports and exports. Then enter each country's final consumption of each good on the line labeled "Consumption." When the two countries did not specialize, the total production of jeans was 36 million pairs per month, and the total production of corn was 104 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 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 previous table. Enter this difference in the boxes across the last row (labeled "Increase in Consumption").