Question 1 is in picture 10.51.29 and 10.53.27 and has multiple parts
Question 2 is in picture 10.54.38 and 10.54.56 and 10.55.09 and also has multiple parts
Consider two neighboring island countries called Bellissima and Euphoria. They each have 4 million labor hours available per month that they can use to produce corn, jeans, or a combination of both. The following table shows the amount of corn orjeans that can be produced using 1 hour of labor. Corn Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Bellissima 12 24 Euphoria 8 32 Initially, suppose Bellissima uses 1 million hours of labor per month to produce corn and 3 million hours per month to produce jeans, while Euphoria uses 3 million hours of labor per month to produce corn and 1 million hours per month to produce jeans. Consequently, Bellissima produces 12 million bushels of corn and 72 million pairs ofjeans. and Euphoria produces 24 million bushels of corn 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 corn and jeans it produces. Bellissima's opportunity cost of producing 1 bushel of corn is V of jeans, and Euphoria's opportunity cost of producing 1 bushel of corn is V of jeans. Therefore, 7 has a comparative advantage in the production of corn, and v 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 corn will produce |:| million bushels per month, and the country that produces jeans will produce 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 corn trades 26 million bushels of corn to the other country in exchange for 78 million pairs ofjeans. 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 nal consumption of each good on the line marked \"Consumption. \" When the two countries did not specialize, the total production of corn was 36 million bushels per month, and the total production of jeans was 104 million pairs per month. Because of specialization, the total production of corn has increased by E million bushels per month, and the total production of jeans has increased by |:| million pairs per month. Because the two countries produce more com and more jeans 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 \"). Bellissima Euphoria Corn Jeans Corn 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 Increase in Consumption hh|h UU|U UU|U nh|h When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Maldonia and Lamponia. Both countries produce lemons and tea, each initially (i.e., before specialization and trade) producing 12 million pounds of lemons and 6 million pounds of tea, as indicated by the grey stars marked with the letter A. (? (? Maldonia Lamponia 32 32 28 28 TEA (Millions of pounds) 24 PPF 20 16 N TEA (Millions of pounds) 12 PPF 8 A A 8 12 16 20 24 28 32 0 4 8 12 16 20 24 28 32 LEMONS (Millions of pounds) LEMONS (Millions of pounds) Maldonia has a comparative advantage in the production of , while Lamponia has a comparative advantage in the production of . Suppose that Maldonia and Lamponia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of million pounds of tea and million pounds of lemons.Suppose that Maldonia and Lamponia agree to trade. Each country focuses its resources on producing only the good in which it has a comparative advantage. The countries decide to exchange 4 million pounds of lemons for 4 million pounds of tea. This ratio of goods is known as the price of trade between Maldonia and Lamponia. The following graph shows the same PPF for Maldonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Maldonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. (? Maldonia 32 -+ 28 Consumption After Trade 24 PPF TEA (Millions of pounds) 20 16 12 8 A 4 O 8 12 16 20 24 28 32 LEMONS (Millions of pounds) The following graph shows the same PPF for Lamponia as before, as well as its initial consumption at point A.As you did for Maldonia, place a black point (plus symbol) on the following graph to indicate Lamponia's consumption after trade. 6') Lamponia 32 23 Consumption After Trade 24 20 16 12 PPF TEA (Millions of pounds) | : | : 4 B 12 16 20 24 28 32 LEMONS (Millions of pounds) True or False: Without engaging in international trade, Maldonia and Lamponia would not have been able to consume at the after-trade consumptior bundles. (Hint: Base this question on the answers you previously entered on this page.) 0 True 0 False
