3. Gains from trade Consider two neighboring island countries called Bellissima and Felicidad. 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 or jeans that can be produced using 1 hour of labor. Rye Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Bellissima 12 24 Felicidad 8 32 Initially, suppose Bellissima 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, Bellissima produces 12 million bushels of rye and 72 million pairs of jeans, and Felicidad produces 24 million bushels of rye and 32 million pairs of jeans. 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. Bellissima's opportunity cost of producing 1 bushel of rye is _2 pairs of jeans, and Felicidad's opportunity cost of producing 1 bushel of rye is 4 pairs of jeans. Therefore, Bellissima _ has a comparative advantage in the production of rye, and Felicidad _ 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 48 million bushels per month, and the country that produces jeans will produce 16 million pairs per month. In the following table, enter each country's production decision on the third row of the table (marked "Production"). Suppose the country that produces rye trades 26 million bushels of rye to the other country in exchange for 78 million pairs of jeans.Bellissima Felicidad Rye Jeans Rye Jeans (Millions of bushels) (Millions of pairs) (Millions of bushels) (Millions of pairs) Without Trade Production 12 72 24 32 Consumption 12 72 24 32 With Trade Production Trade action Consumption Exports 78 Gains from Trade Increase in Consumption Imports 78 Grade It Now Save & ContinueBellissima's opportunity cost of producing 1 bushel of rye is (1/2pair, 1/4 pair, 2 pairs, or 4 pairs)_ of jeans and Felicidad's opportunity cost of producing 1 bushel of rye is (1/2pair, 1/4 pair, 2 pairs, or 4 pairs). of jeans. Therefore, (Bellissima or Felicidad) has a comparative advantage in the production of rye, and(Bellissima, or Felicidad) _ has a comparative advantage in the production of jeans.Bellissima Felicidad Rye Jeans Rye Jeans (Millions of bushels) (Millions of pairs) (Millions of bushels) (Millions of pairs) Without Trade Production 12 72 24 32 Consumption 12 72 24 32 With Trade Production Trade action Consumption Exports 26 Gains from Trade Increase in Consumption Imports 26 Grade It Now Save & Continue Continue without savingBellissima Felicidad Rye Jeans Rye Jeans ( Millions of bushels) (Millions of pairs) ( Millions of bushels) ( Millions of pairs) Without Trade Production 12 72 24 32 Consumption 12 72 24 32 With Trade Production Trade action Consumption Exports 26 Gains from Trade Increase in Consumption Imports 26good relative to the firs the last row (marked "Increase in Consumption"). Bellissima Felicidad Rye Jeans Rye Jeans ( Millions of bushels) (Millions of pairs) (Millions of bushels) (Millions of pairs) Without Trade Production 12 72 24 32 Consumption 12 72 24 32 With Trade Production Trade action Consumption Gains from Trade Exports 78 Increase in Consumption Imports 78