3. Gains from trade

Consider two neighboring island countries called Euphoria 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.

Country | Jeans (Pairs per hour of labor) | Corn (Bushels per hour of labor)

Euphoria 5 20

Contente 8 16

Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Euphoria uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Euphoria produces 15 million pairs of jeans and 20 million bushels of corn, and Contente produces 8 million pairs of jeans and 48 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.

1. Euphoria's opportunity cost of producing 1 pair of jeans is ________ (1/2, 1/4,2, or 4 bushels) of corn, and Contente's opportunity cost of producing 1 pair of jeans is ________(1/2, 1/4,2, or 4 bushels) of corn. Therefore, ____________ (Euphoria, Contente) has a comparative advantage in the production of jeans, and _____________(Euphoria, Contente) has a comparative advantage in the production of corn.
2. Suppose that each country completely specializes in the production of the good in which it has a comparative advantage, producingonlythat good. In this case, the country that produces jeans will produce___________millionpairs per month, and the country that produces corn will produce _________ millionbushels per month.

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."

3.When the two countries did not specialize, the total production of jeans was 23 million pairs per month, and the total production of corn was 68 million bushels per month. Because of specialization, the total production of jeans has increased by ___________ millionpairs per month, and the total production of corn has increased by ___________millionbushels 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 tradethat 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").

4. Euphoria Contene

(Jeans Millions of Pairs) (Corn Millions Of Bushels) (Jeans Millions of Pairs) (Corn Millions Of Bushels)

Without Trade

Production 15 20 8 48

Consumption 15 20 8 48

With Trade

Production ? ? ? ?

Trade Action Import/Export 18? Import/Export 54? Import/Export 18? Import/Export 54?

Consumption ? ? ? ?

Gains from Trade

Increase in Consumtion ? ? ? ?

Can you please help with questions 1-4? On question 4, I only need help with the chart points that have a question mark associated. (i.e. Import/Export 18? or ? by itself. The other blanks can be omitted.