Because the two countries produce more rye and more jeans 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 thetable. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption").FelicidadBellissimaRyeJeansRye(Millions of bushels)Jeans(Millions of bushels)(Millions of pairs)(Millions of pairs)Without TradeProduction1520848Consumption152048With TradeProductionTrade ActionConsumptionGains from TradeIncrease in Consumption 2. Gains from tradeConsider two neighboring island countries called Felicidad and Bellissima. They each have 4 million labor hours available per month that they can useto produce rye, jeans, or a combination of both. The followlng table shows the amount of rye or jeans that can be produced using 1 hour of labor.RyeJeansCountry(Bushels per hour of labor)(Pairs per hour of labor)20Felicidad16BellissimaInitially, suppose Bellissima uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Felicidaduses 3 million hours of labor per month to produce rye and 1 millon hours per month to produce jeans. Consequently, Felicidad produces 15 millionbushels of rye and 20 million pairs of jeans, and Bellissima produces 8 million bushels of rye and 48 million pairs of jeans. Assume there are no othercountries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of rye and jeans itproduces.v of jeans, and Bellissima's opportunity cost of producing 1 bushel of rye ishas a comparativeFelicidad's opportunity cost of producing 1 bushel of rye isv of jeans. Therefore,has a comparative advantage in the production of rye, andadvantage 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. Inmillion bushels per month, and the country that produces jeans will producethis case, the country that produces rye will producemillion 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 rye trades 18 million bushels of rye to the other country In exchange for 54 million pairs of jeans.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," andenter each country's final consumption of each good on the line marked "Consumption."When the two countries did not specialize, the total production of rye was 23 million bushels per month, and the total production of jeans was 68million bushels per month, and the totalmillion pairs per month. Because of specialization, the total production of rye has increased byproduction of jeans has increased bymillion pairs per month.Because the two countries produce more rye and more jeans under specialization, each country is able to galn from trade.

Question

Because the two countries produce more rye and more jeans 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 thetable. In the following table, enter this difference in the boxes across the last row (marked &#34;Increase in Consumption&#34;).FelicidadBellissimaRyeJeansRye(Millions of bushels)Jeans(Millions of bushels)(Millions of pairs)(Millions of pairs)Without TradeProduction1520848Consumption152048With TradeProductionTrade ActionConsumptionGains from TradeIncrease in Consumption 2. Gains from tradeConsider two neighboring island countries called Felicidad and Bellissima. They each have 4 million labor hours available per month that they can useto produce rye, jeans, or a combination of both. The followlng table shows the amount of rye or jeans that can be produced using 1 hour of labor.RyeJeansCountry(Bushels per hour of labor)(Pairs per hour of labor)20Felicidad16BellissimaInitially, suppose Bellissima uses 1 million hours of labor per month to produce rye and 3 million hours per month to produce jeans, while Felicidaduses 3 million hours of labor per month to produce rye and 1 millon hours per month to produce jeans. Consequently, Felicidad produces 15 millionbushels of rye and 20 million pairs of jeans, and Bellissima produces 8 million bushels of rye and 48 million pairs of jeans. Assume there are no othercountries willing to trade goods, so, in the absence of trade between these two countries, each country consumes the amount of rye and jeans itproduces.v of jeans, and Bellissima's opportunity cost of producing 1 bushel of rye ishas a comparativeFelicidad's opportunity cost of producing 1 bushel of rye isv of jeans. Therefore,has a comparative advantage in the production of rye, andadvantage 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. Inmillion bushels per month, and the country that produces jeans will producethis case, the country that produces rye will producemillion pairs per month.In the following table, enter each country's production decision on the third row of the table (marked &#34;Production&#34;).Suppose the country that produces rye trades 18 million bushels of rye to the other country In exchange for 54 million pairs of jeans.In the following table, select the amount of each good that each country exports and Imports in the boxes across the row marked &#34;Trade Action,&#34; andenter each country's final consumption of each good on the line marked &#34;Consumption.&#34;When the two countries did not specialize, the total production of rye was 23 million bushels per month, and the total production of jeans was 68million bushels per month, and the totalmillion pairs per month. Because of specialization, the total production of rye has increased byproduction of jeans has increased bymillion pairs per month.Because the two countries produce more rye and more jeans under specialization, each country is able to galn from trade.

Accepted Answer

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