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Consider two neighboring island countries called Bellissima and Felicidad. They each have 4 million labor hours available per week that they can use to produce

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Consider two neighboring island countries called Bellissima and Felicidad. They each have 4 million labor hours available per week that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or seans that can be produced using 1 hour of labor. Country Bellissima Felicidad Rye (Bushels per hour of labor) 12 Jeans (Pairs per hour of labor) 24 32 Initially, suppose Bellissima se 1 million hours of labor per week to produce rye and 3 million hours per week to produce Jeans, while Felicidades 3 million hours of labor per week to produce rye and 1 million hours per week to produce jeans. Consequently, Bellissima produces 12 million bushes 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 rveis of Jeans, and fellddad's opportunity cost of producing bushel of reis 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 cornpletely specializes in the production of the good in which has a comparative advantage, producing only that good. As this case, the country that produces rye will produce million bushels per week, and the country that produces Jeans will produce million pairs per week. In the following table, entor 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 3 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." When the two countries did not specialize, the total production of rye was 36 million bushels per week, and the total production of jeans was 104 million pairs per week. Because of specialization, the total production of rye 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 rve and more jeans under specialization, each country is able to gain from trade Calculate the sains from trade--that is, the amount by which each country has increased its consumotion of each dood relative to the fest row of the table. In the following table, enter the difference in the boxes across the last row (marked "Increase in Consumtion Bellissima Rye Jeans (Millions of bushels) (Millions of pairs) Felicidad Rye Jeans (Millions of bushels) (Millions of pairs) 24 72 32 12 72 12 24 32 a Without Trade Production Consumption with Trade Production Trade action Consumption Gains from Trade Increase in consumption

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