Suppose there exist two imaginary countries, Glacier and Congaree. Their labor forces are each capable of supplying four million hours per week that can be used to produce pistachios, chinos, or some combination of the two. The follawing table shows the amount of pistachios or chinos that can be produced by one hour of labor. Suppose that initially Glacier uses 1 milion hours of labor per week to produce pistachios and 3 mitlon hours per week to produce chinos. while Congaree uses 3 milion hours of labor per week to produce pistachios and 1 million hours per week to produce chinos- As a res ult, Gacier prodoces 8 milion pounds of pistachios and 48 milion pairs of chinos, and Congaree preduces 15 milion peunds of pistachios and 20 million pairs of chings: Assume there are no other countries wiling to engage in trade, so, in the absence af trade between these two countries, each country consumes the amount of pistachios and chines it produces. Glacier's opportunity cost of producing 1 pound of pistachios is of chines, and Congaree's opportunity cost of producing 1 pound of pistachios ls of chinos. Therefore, has a comparative advantage in the production of pistachios, and a comparative advantage in the production of chinos. 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 pistachlos will produce million pounds per week, and the country that produces chinos will produce million pairs per week. In the following table, enter each country's productian decision on the third row of the table (marked "Production"). Suppose the country that produces pistachios trades 18 milion pounds of pistachios to the other country in exchange for 54 mialion pairs of chinas. In the following table, select the amount of each good that each coumtry exports and impdrts in the boxes across the row marked irace Action, and enter each country's finat consumption of each good on the line marked "Consumption," When the two countries did not specialize, the total production of pistachios was 23 miliion pounds per week, and the total production of chioos was 68 million pairs per week. Because of specialization, the total production of pistachios has increased by production of chinos has increased by million pairs per week. Becaise the two countries produce more plstachios and more chinos under specialization, each country is able to gain from trade. Cakulate the gains frem trade - that ik, the amount by which nach country has ancreased its consumption of each good revative to the first row of the tabie. In the following tabie, enfer this diference in the boves across the last row (marked "increase in consumption? Because the two countrios produce more pistachios and more chinos under specialization, each country is able to gain from trade. Caiculate the gains from trade-that is, the amount by which each country has increased its consumption of each good reiative to the first row of the tabie. In the following tabie, enter this difference in the boxes across the last row (marked "fncrease in Consumption")
