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3. Gains from trade 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 jeans, rye, or a combination of both. The following table shows the amount of jeans or rye that can be produced using I hour of labor. Jeans Rye Country (Pairs per hour of labor) (Bushels per hour of labor) Bellissima Euphoria 20 Initially, suppose Bellissima uses 1 million hours of labor per month to produce jeans and 3 milli month to produce rye, while Euphoria uses 3 million hours of labor per month to produce jean eans and 1 million hours per month to produce rye. Consequently, Bellissima produces a million pairs of jeans and 48 million bushels of rye, and Euphoria pr oduces 15 million pairs of jeans and 20 million bushels of rye. Assume there are no other countries willing to trade goods, so, in the absence ence of trade between these two countries, each country consumes the amount of jeans and rye it produces Bellissima's opportunity cost of producing 1 pair of jeans is_ of rye, and Euphoria's opportunity cost of producing 1 pair of jeans is of rye. Therefore, has a comparative advantage in the production of jeans, and has a comparative advantage in the production of rye. 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 rye 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"). Suppose the country that produces jeans trades 18 million pairs of jeans to the other country in exchange for 54 million bushels of rye. 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 jeans was 23 million pairs per month, and the total production of rye was $5 million bushels per month. Because of specialization, the total production of jeans has Increased by [ million pairs per month, and the total production of rye has increased by ( million bushels per month. Because the two countries produce more jeans and more rye 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"). Bellissima Euphoria Jeans Rye Jeans Rye (Millions of pairs) (Millions of bushels) (Millions of pairs) (Millions of bushels) Without Trade Production Consumption 20 With Trade Production Trade action 0 0 0 consumption 0 0 0 0 0 0 0 0 0 Gains from Trade Increase In Consumption Grade It Now Save & Continue Continue without saving