Comparative Advantage
Bellissima has a comparative advantage in producing rye as the opportunity cost is lower .
Dolorium has a comparative advantage in producing jeans as the opportunity cost is lower.
If Bellissima produces rye, in which it has comparative advantage, it will produce (4 million labor hours x 8) 32 million pounds of rye.
If Dolorium produces jeans, in which it has comparative advantage, it will produce (4 million labor hours x 20) 80 million pairs of jeans.
Bellissma | Dolorium | |||
Rye | Jeans | Rye | Jeans | |
Milions of bushels | Millions of pairs | Milions of bushels | Millions of pairs | |
Without trade | ||||
Production | 8 | 48 | 15 | 20 |
Consumption | 8 | 48 | 15 | 20 |
With trade | ||||
Production | ||||
Trade Action | 32 | 0 | 0 | 80 |
Consumption | 14 | 54 | 18 | 26 |
Gains from trade | ||||
Increase in consumption | 6 | 6 | 3 | 6 |
Homework (Ch 03) Consider two neighboring island countries called Bellissima and Dolorium. They each have 4...
Consider two neighboring island countries called Dolorium and Bellissima. 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 1 hour of labor. Country Jeans Rye (Pairs per hour of labor) (Bushels per hour of labor) Dolorium 5 20 Bellissima 8 16 Initially, suppose Bellissima uses 1 million hours of labor per...
3. Gains from trade Consider two neighboring island countries called Bellissima and Dolorium. They each have 4 million labor hours available per month 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. Country Bellissima Dolorium Jeans (Pairs per hour of labor) 12 Corn (Bushels per hour of labor) 24 Initially, suppose Bellissima uses 1 million hours of...
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 1 hour of labor eans Country(Pairs per hour of labor) Bellissima Euphoria Rye (Bushels per hour of labor) 16 20 Initially, suppose Bellissima uses 1 million hours of labor...
3. Gains from trade Consider two neighboring island countries called Bellissima and Dolorium. They each have 4 million labor hours available per month that they can use to produce rye, jeans, or a combination of both. The following table shows the amount of rye or jeans that can be produced using 1 hour of labor. Rye (Bushels per hour of labor) Jeans Country (Pairs per hour of labor) 10 16 nitially, suppose Bellissima uses 1 million hours of labor per...
Consider two neighboring island countries called Bellissima and Dolorium. They each have 4 million labor hours available per week 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 1 hour of labor.CountryJeansRye(Pairs per hour of labor)(Bushels per hour of labor)Bellissima816Dolorium520Initially, suppose Bellissima uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce...
Consider two neighboring island countries called Bellissima and Euphoria. They each have 4 million labor hours available per week 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 1 hour of labor. Country Bellissima Euphoria Jeans (Pairs per hour of labor) 8 Rye (Bushels per hour of labor) 16 20 Initially, suppose Bellissima uses 1 million hours of labor per week...
3. Gains from trade Consider two neighboring island countries called Dolorium and Contente. They each have 4 million labor hours available per week 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 1 hour of labor. Jeans Rye (Bushels per hour of labor) 20 16 (Pairs per hour of labor) Country Dolorium Contente Initially, suppose Contente uses 1 million hours of...
3. Gains from trade Consider two neighboring island countries called Bellissima and Euphoria. They each have 4 million labor hours available per week 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 1 hour of labor eans Country(Pairs per hour of Iabor) Bellissima Euphoria Rye (Bushels per hour of labor) 12 16 4 Initially, suppose Bellissima uses 1 million hours of...
3. Gains from trade Consider two neighbouring island countries called Dolorium and Bellissima. They each have 4 million labour hours available per week that they can use to produce corn, jeans, or a combination of both. The following table shows the amount of corn or jeans that can be produced using one hour of labour. Country Dolorium Corn (Bushels per hour of labour) 5 Jeans (Pairs per hour of labour) 20 Bellissima 8 16 Initially, suppose Bellissima uses 1 million...
3. Gains from trade Consider two neighboring island countries called Dolorium and Arcadia. They each have 4 million labor hours available per month 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. Country Jeans Corn (Pairs per hour of labor) (Bushels per hour of labor) Dolorium 4 16 Arcadia 6 12 Initially, suppose Arcadia uses 1 million...