3. Comparative advantage and gains from trade 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 rye, jeans, or a combination of both. The following table shows the amount of rye orjeans that can be produced using 1 hour of labor. Country Rye Jeans (Bushels per hour of labor) (Pairs per hour of labor) Felicidad 5 2O Arcadia 8 16 Initially, suppose Arcadia uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Felicidad uses 3 million hours of labor per month to produce rye and 1 million hours per month to produce jeans. Consequently, Felicidad produces 15 million bushels of rye and 20 million pairs of jeans, and Arcadia produces 8 million bushels of rye and 48 million pairs ofjeans. 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 rye and jeans it produces. Felicidad's opportunity cost of producing 1 bushel of rye is of jeans, and Arcadia's opportunity cost of producing 1 bushel of rye is of jeans. Therefore, has a comparative advantage in the production of rye, and has a comparative advantage in the production of jeans. 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 rye will produce million bushels per month, and the country that produces jeans will produce million pairs per month. In the following table, enter each country's production decision on the third row of the table (labeled \"Production\"). Felicidad Arcadia Rye Jeans Rye Jeans (Millions of bushels) (Millions of pairs) (Millions of bushels) (Millions of pairs) Without Trade Production 15 20 8 48 Consumption 15 20 8 48 With Trade Production Imports/Exports Consumption Gains from Trade Increase in Consumption Suppose the country that produces rye trades 18 million bushels of rye to the other country in exchange for 54 million pairs of jeans. 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 rye was 23 million bushels per month, and the total production of jeans was 68 million pairs per month. Because of specialization, the total production of rye has increased by million bushels per month, and the total production of jeans has increased by million pairs per month. Because the two countries produce more rye and more jeans under specialization, each country is able to gain from trade