CENGAGE MINDTAP Q Search this course Homework (Ch 03) > Country Felicidad Bellissima Corn Jeans (Bushels per hour of labor) (Pairs per hour of labor) 5 20 8 16 Initially, suppose Bellissima uses 1 million hours of labor per week to produce corn and 3 million hours per week to produce jeans, while Felicidad u 3 million hours of labor per week to produce corn and 1 milion hours per week to produce Jeans. Consequently, Felicidad produces 15 million bushe of corn and 20 million pairs of jeans, and Bellissima produces 8 million bushels of corn and 48 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 corn and jeans it produces Felicidad's opportunity cost of producing 1 bushel of corn is 4 pairs of jeans, and Bellissima's opportunity cost of producing 1 bushel of corn 2 pairs of jeans. Therefore, Bellissima has a comparative advantage in the production of corn, and Felicidad has a comparativ 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. this case, the country that produces corn will produce 12 million bushels per week, and the country that produces Jeans will produce 80 million pairs per week. In the following table, enter each country's production decision on the third row of the table (marked Production) Suppose the country that produces contrades 18 million bushels of corn to the other country in exchange for 54 million pairs of seans CENGAGE MINDTAP Q Search this course Homework (Ch 03) > In the following table, enter each country's production decision on the third row of the table (marked "Production"), Suppose the country that produces corn trades 18 million bushels of corn to the other country in exchange for 54 million pairs of jeans. 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, 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 corn was 23 million bushels per week, and the total production of jeans was 68 million pairs per week. Because of specialization, the total production of corn has increased by million bushels per week, and the total production of jeans has increased by million pairs per week. Because the two countries produce more com and more Jeans 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 table. In the following table, enter this difference in the boxes across the last row (marked "Increase in consumption"). Felicidad Corn Jeans (Millions of bushels) (Millions of pairs) Bellissima Corn Jeans (Millions of bushels) (Millions of pairs) 15 20 8 Without Trade Production Consumption With Trade 48 15 20 8 48 Production CENGAGE MINDTAP Q Search this course Homework (Ch 03) lion pairs per week. Because of specialization, the total production of corn has increased by -duction of jeans has increased by million pairs per week. million bushels per week, and the total cause the two countries produce more com and more jeans under specialization, each country is able to gain from trade. culate 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 ble. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Felicidad Corn Jeans (Millions of bushels) (Millions of pairs) Bellissima Corn Jeans (Millions of bushels) (Millions of pairs) Without Trade Production 15 20 8 48 Consumption 15 20 8 48 Vith Trade Production 0 80 32 Trade action Imports 18 Exports 54 Exports 18 Imports 54 Consumption Sains from Trade Increase in Consumption Grade It Now Save & Continue Continue without saving
