Gains from trade Consider two neighboring island countries called Euphoria and Arcadia

Gains from trade Consider two neighboring island countries called Euphoria and Arcadia. They each have 4 million labor hours available per week that they can use to produce jeans, corn, or a combination of both. The following table shows the amount of jeans or corn that can be produced using 1 hour of labor Jeans (Pairs per hour of labor) Country Euphoria Arcadia Corn (Bushels per hour of labor) 20 8 16 Initially, suppose Arcadia uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce corn while Euphoria uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce com. Consequently, Euphoria produces 15 million pairs of jeans and 20 million bushels of com, and Arcadia produces 8 million pairs of jeans and 48 million bushels of corn. 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 comit produces. Euphoria's opportunity cost of producing 1 pair of jeans is of corn, and Arcadia's opportunity cost of producing 1 pair of jeans is of com. Therefore, has a comparative advantage in the production of jeans, and has a comparative advantage in the production of corn Suppose that each country decides to completely specialize 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 week, and the country that produces com will produce million bushels per week
Based on your answers to the prior question, enter each country's production decision in the boxes on the third row (labeled "Production") of the table that follows. Now, suppose the country that produces jeans trades 18 million pairs of jeans to the other country in exchange for 54 million bushels of com In the following table, use the dropdown menus to select the amount of each good that each country exports and imports on the row labeled "Trade action." Then enter each country's final consumption of each good in the boxes on the row labeled "Consumption." When the two countries did not specialize, the total production of jeans was 23 million pairs per week, and the total production of com was 68 million bushels per week. Because of specialization, the total production of jeans has increased by million pairs per week, and the total production of corn has increased by million bushels per week. Because the two countries produce more jeans and more com under specialization, each country is able to gain from trade. Calculate the guins 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 on the last row (labeled "Increase in consumption"). Euphoria Jeans Corn (Millions of pairs) (Millions of bushels) Arcadia Jeans Corn (Millions of pairs) (Millions of bushels) Without trade 15 20 8 48 Production Consumption with trade 15 20 8 48
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 on the last row (labeled "Increase in consumption"). Euphoria Jeans Corn (Millions of pairs) (Millions of bushels) Arcadia Jeans Corn (Millions of pairs) (Millions of bushels) Without trade 15 20 8 48 15 20 B 48 Production Consumption With trade Production Trade action Consumption Gains from trade Increase in consumption