Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , drawthe economy's production possibility frontier on hindsight of the relevant assumption and why the points outside the frontier unattainable?.

Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , drawthe economy's production possibility frontier on hindsight of the relevant assumption and why the points outside the frontier unattainable?.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , ( i )economy's production possibility frontier on hindsight of the relevant assumption ( ii ) why the points outside the frontier unattainable? ( III ) identify three ways by which the economy can attain the level of production outside the production possibility frontier. ( iv ) what happens to the production possibility frontier when the economy discovers an improved technology for shoes ( v ) what happens to the production possibility frontier when technological change overwhelmingly favors the production of computers. ( vi ) assume now the sacrifice…
Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , ( i )economy's production possibility frontier on hindsight of the relevant assumption ( ii ) why the points outside the frontier unattainable? ( iv ) what happens to the production possibility frontier when the economy discovers an improved technology for shoes ( v ) what happens to the production possibility frontier when technological change overwhelmingly favors the production of computers. ( vi ) assume now the sacrifice ratio is greater than 1, show what will happen to the shape of the production possibility frontier. (vii) mention two conditions…
Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions: Why are points outside the frontier unattainable?
Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions: i. Draw the economy’s production possibility frontier on hindsight of the relevantassumption.
Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions: Identify three ways by which the economy can attain the level of production outside the PPF.
Assume an economy producing only two goods (shoes and computers) with a fixed amount ofproductive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions:i. Draw the economy’s production possibility frontier on hindsight of the relevantassumption.ii. Why are points outside the frontier unattainable? iii. Identify three ways by which the economy can attain the level of production outside thePPF. iv. What happens to the PPF when technological change overwhelmingly favours theproduction of computers? v. What happens to the PPF when the economy discovers an improved technology forproducing shoes? vi. Assume now that the sacrifice ratio is greater than 1, show what will happen to the…
Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions: What happens to the PPF when the economy discovers an improved technology for producing shoes?
Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the law of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the foregoing assumptions, answer the following questions: i. Draw the economy’s production possibility frontier on hindsight of the relevant assumption. What happens to the PPF when technological change overwhelmingly favours the production of computers? What happens to the PPF when the economy discovers an improved technology for producing shoes? Assume now that the sacrifice ratio is greater than 1, show what will happen to the shape of the production possibility frontier. vii. Mention three (3) conditions under which the sacrifice ratio between the goods will be…
An endogenous variable is a variable explained by an economic model. An exogenous variable is a variable that is taken as given and is not explained by an economic model. True O False
The graph below is Mendork's production possibility curve for the only two goods that it produces: quirks and quarks. Quantity of Quarks 800 700 600 500 400 300 200 100 2 4 6 8 10 12 14 16 18 20 Quantity of Quirks Note: If the image does not appear, right-click on the placeholder and choose Show picture or View image. If Mendork's current production is at point A, what is the (approximate) cost of producing one more quirk? a) 50 quarks B b) 100 quarks c) 200 quarks d) One more quark e) 25 quarks
Supermarché Jean Claude has decided to manufacture its own brand of non-alcoholic beverages, called NAB, and chocolate bars, called S-JC. A certain amount of money has been allocated to the production of these two products. Jean Claude believes in the old saying that a picture is worth a thousand words, and once again, he has called on you. This time, he wants to see diagrams that illustrate the effects of each of the following events on the production possibilities for NABS and S-JCs so he can visualize the situation. (a) A new and more efficient method of producing non-alcoholic beverages is discovered. (b) The demand for both non-alcoholic beverages and chocolate bars increases. (c) More workers are hired to produce S-JCs. (d) Resources are transferred from S-JC production to NAB production. (e) All workers are trained so that the quality of their labour services improves. Instructions Produce the series of graphs with accompanying texts (150-175 words) so that Uncle Jean Claude…
A budget constraint model differs from production possibilities model in that, typically O only the budget constraint depicts an inverse relationship, or a trade-off. The budget constraint shows how scarcity applies to producers O only the budget constraint demonstrates diminishing returns. only the production possibilities model demonstrates diminishing returns.