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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 the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Euphoria Contente Rye (Millions of bushels) Jeans (Millions of pairs) Rye (Millions of bushels) Jeans (Millions of pairs) Without Trade Production 15 20 48 Consumption With Trade 15 20 8 48 Production Trade action Consumption Gains from Trade Increase in Consumption

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 the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Euphoria Contente Rye (Millions of bushels) Jeans (Millions of pairs) Rye (Millions of bushels) Jeans (Millions of pairs) Without Trade Production 15 20 48 Consumption With Trade 15 20 8 48 Production Trade action Consumption Gains from Trade Increase in Consumption

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter33: International Trade
Section: Chapter Questions
Problem 2SCQ: Brazil can produce 100 pounds of beef or 10 autos. In contrast the United States can produce 40...
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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 the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Euphoria Contente Rye (Millions of bushels) Jeans (Millions of pairs) Rye (Millions of bushels) Jeans (Millions of pairs) Without Trade Production 15 20 8 48 Consumption 15 20 8 48 With Trade Production Trade action Consumption Gains from Trade Increase in Consumption
Transcribed Image Text: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 the table. In the following table, enter this difference in the boxes across the last row (marked "Increase in Consumption"). Euphoria Contente Rye (Millions of bushels) Jeans (Millions of pairs) Rye (Millions of bushels) Jeans (Millions of pairs) Without Trade Production 15 20 8 48 Consumption 15 20 8 48 With Trade Production Trade action Consumption Gains from Trade Increase in Consumption
The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Freedonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Freedonia Consumpton Aer Trade 24 PPF 16 16 24 40 POTATOES (Mona of pourda) The following graph shows the same PPF for Sylvania as before, as well as its initial consumption at point A. As you did for Freedonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. Sylvania Consumption Aer Trade PPF 43 12 24 16 24 POTATOES (Miomi af pounda) True or False: without engaging in international trade, Freedonia and Sylvania would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) True False TEA (Mlions of pounds) TEA (Mions of pounds)
Transcribed Image Text:The following graph shows the same PPF for Freedonia as before, as well as its initial consumption at point A. Place a black point (plus symbol) on the graph to indicate Freedonia's consumption after trade. Note: Dashed drop lines will automatically extend to both axes. Freedonia Consumpton Aer Trade 24 PPF 16 16 24 40 POTATOES (Mona of pourda) The following graph shows the same PPF for Sylvania as before, as well as its initial consumption at point A. As you did for Freedonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. Sylvania Consumption Aer Trade PPF 43 12 24 16 24 POTATOES (Miomi af pounda) True or False: without engaging in international trade, Freedonia and Sylvania would not have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) True False TEA (Mlions of pounds) TEA (Mions of pounds)
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In free trade, each country specializes on the good in which it has comparative advantage which leads to more production and consumption hence gains from trade. 

 

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