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Consider two neighboring island countries called Dolorium and Bellissima. They each have 4 million labor hours available per month that they can use to produce
Consider two neighboring island countries called Dolorium and Bellissima. 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 Dolorium Jeans (Pairs per hour of labor) 8 Corn (Bushels per hour of labor) 32 Bellissima 12 24 Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce corn, while Dolorum uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce corn. Consequently, Dolorum produces 24 milion pairs of jeans and 32 million bushels of com, and Bellissima produces 12 million pairs of jeans and 72 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 com It produces Dolorium's opportunity cost of producing 1 pair of jeans is of corn, and Bellissima's opportunity cost of producing 1 pair of jeans is of corn. Therefore, has a comparative advantage in the production of jeans, and comparative advantage in the production of corn. has a 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 Jeans will produce million pairs per month, and the country that produces corn will produce million bushels per month In the following table, enter each country's production decision on the third row of the table (marked "Production")
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