16 Dolorium 5 20 Initially, suppose Arcadia uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Dolorium uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Arcadia produces 8 million pairs of jeans and 48 million bushels of rye, and Dolorium produces 15 million pairs of jeans and 20
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Country
|
Jeans
|
Rye
|
|---|---|---|
| Arcadia | 8 | 16 |
| Dolorium | 5 | 20 |
Initially, suppose Arcadia uses 1 million hours of labor per month to produce jeans and 3 million hours per month to produce rye, while Dolorium uses 3 million hours of labor per month to produce jeans and 1 million hours per month to produce rye. Consequently, Arcadia produces 8 million pairs of jeans and 48 million bushels of rye, and Dolorium produces 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 of trade between these two countries, each country consumes the amount of jeans and rye it produces.
Arcadia's
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.
Suppose the country that produces jeans trades 18 million pairs of jeans to the other country in exchange for 54 million bushels of rye.
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 68 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.
| Without Trade | ||||
| Production | 8 | 48 | 15 | 20 |
| Consumption | 8 | 48 | 15 | 20 |
| With Trade | ||||
| Production |
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| Trade action | IMPORT 18/ EXPORT 18 | IMPORT 54 OR EXPORT 54 | IMPORT 18 OR EXPORT 18 | IMPORT 54 OR EXPORT 54 |
| Consumption |
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| Increase in Consumption |
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