ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 2, Problem 3.5P
A
To determine
Plot the
Concept Introduction:
Production productivity frontier: It is a curve which shows the maximum possible output of two goods with the given set of efficiently used inputs.
B
To determine
The cost of producing an additional car when
Concept Introduction:
Production productivity frontier: It is a curve which shows the maximum possible output of two goods with the given set of efficiently used inputs.
C
To determine
The cost of producing an additional car when
Concept Introduction:
Production productivity frontier: It is a curve which shows the maximum possible output of two goods with the given set of efficiently used inputs.
D
To determine
The cost of producing an additional washing machine when
Concept Introduction:
Production productivity frontier: It is a curve which shows the maximum possible output of two goods with the given set of efficiently used inputs.
D
To determine
What is derived about the concept of
Concept Introduction:
Production productivity frontier: It is a curve which shows the maximum possible output of two goods with the given set of efficiently used inputs.
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(Shape of the PPF) Suppose a production possibilitiesfrontier includes the following combinations:Cars Washing Machines0 1,000100 600200 0a. Graph the PPF, assuming that it has no curvedsegments.b. What is the cost of producing an additional car when50 cars are being produced?
A production possibilities table for bananas and apples is shown below:
Production Alternatives
Type of Production
A
D
E
Bananas (pounds)
20
40
60
80
Apples (pounds)
100
75
50
25
a. Show these data graphically.
Instructions: Use the tool provided 'PPC' to draw a PPC curve (plot 5 points total).
125
Tools
100
PPC
75
50
25
20
40
60
80
100
Bananas (in pounds)
Apples (in pounds)
Firm A
Firm B
18-
14-
16
14-
12
10-
12
8
10-
B.
8-
6-
4-
2-
2-
10 12 14 16 18 20 22
10
Corn
Corn
Part A
What is the opportunity cost of one unit of barley for Firm A?O
What is the opportunity cost of one unit of barley for Firm B?
Give your answers as fractions.
Part B
What is the opportunity cost of one unit of corn for Firm A?
What is the opportunity cost of one unit of corn for Firm B?
Give your answers as fractions.
Part C
In which good does Firm A have a comparative advantage?
In which good does Firm B have a comparative advantage?
Part D
In what good or goods does Firm A have an absolute advantage?
In what good or goods does Firm B have an absolute advantage?
Part E
Suppose Firm A and Firm B divide their time equally between the production of both goods.
What will be the total production of corn?
units
Now suppose both firms completely specialize in the product in which they have a comparative advantage and trade with one another.
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- Other goods and services (millions of units) 5- Malaria can be controlled The World Health Organization's malaria chief says that it is too costly to try to fully eradicate the disease. He says that by using nets, medicine, and DDT it is possible to eliminate 90 percent of malaria cases. But to eliminate 100 percent of cases would be extremely costly. 4- Source: The New York Times, March 4, 2008 3- Make a graph of the production possibilities frontier with malaria control on the x-axis and other goods and services on the y-axis. 2- 1- Draw a graph of the PPF that shows the tradeoff between the production of other goods and services and malaria control in a country that has malaria. Label the curve. 0- 10 20 30 40 50 60 70 80 90 100 Malaria control (percent of cases eliminated) >>> Draw only the objects specified in the question.arrow_forward1. Specialization and production possibilities Suppose Canada produces only cars and trucks. The resources that are used in the production of these two goods are not specialized–that is, the same set of resources is equally useful in producing both trucks and cars. The shape of Canada's production possibilities frontier (PPF) should reflect the fact that as Canada produces more trucks and fewer cars, the opportunity cost of producing each additional truck The following graphs show two possible PPFS for Canada's economy: a straight-line PPF (PPF, ) and a bowed-out PPF (PPF2). (? Graph 1 Graph 2 PPF, PPF 1 CARS CARSarrow_forwardA production possibilities table for bananas and apples is shown below: Production Alternatives Type of Production A B D E Bananas (pounds) 20 40 60 80 Apples (pounds) 100 75 50 25 a. Show these data graphically. Instructions: Use the tool provided 'PPC' to draw a PPC curve (plot 5 points total). 125 Tools 100 PPC 75 50 25 20 40 60 80 100 (in pounds) Instructions: In part c, round your answers to 2 decimal places. b. Does the economy above demonstrate the law of increasing opportunity cost? |(Click to select) c. Based on this information, what is the opportunity cost of a pound of apples? pound(s) of bananas What is the opportunity cost of a pound of bananas? pound(s) of apples Apples (in pounds)arrow_forward
- Refer to the production possibility frontiers for two friends Frodo and Sam who can both produce Ice creams and Jelly beans. Frodo's maximum production of Ice creams is 500 with no Jelly beans, or 2,000 Jelly beans with no Ice creams. Sam's maximum production of Ice creams is 600 with no Jelly beans, or 1,200 Jelly beans with no Ice creams. ICE CREAMS ICE CREAMS 600 500 1200 JELLY BEANS 2000 JELLY BEANS Frodo' PPF Sam's PPF Answer briefly these TWO questions in the box space provided below. Part A: Assuming efficient production without trade, derive the maximum amount of Jelly beans that can be produced by Sam along with 300 Ice creams. Describe your steps in detail. Part B: Assume that Frodo and Sam agree to specialize in production and trade between themselves. Frodo offers 1,000 Jelly beans to Sam in exchange for 300 lce creams. Would Sam agree to this trade?arrow_forwardThe table shows Yucatan's production possibities, Food (pounds per month) Food (pounds per month) 200 Sunscreen (gallons per month) and 200 100 and 400 50 and 600 and 800 150- Draw the four points defined in the table. Use the four-point line tool to draw the PPF. Label it. 100 100 IH Yucatan produces 100 pounds of food per month, it must produce 400 galions of sunscreen to achieve production efficiency 50 The opportunity cost of 1 pound of food isegallons of le00 400 Sunscreen (galons per month) le00 sunscreen 200 1000 The opportunity cost of 1 gallon of sunscroen isO pounds of food. > Answer to 2 decmal places. » Draw only the objects specified in the questionarrow_forwardand Applications Q3 Caroline and Frances are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and brewing root beer, Caroline takes 3 hours to brew a gallon of root beer and 2 hours to make a pizza. Frances takes 7 hours to brew a gallon of root beer and 5 hours to make a pizza. Caroline's opportunity cost of making a pizza is of root beer. has an absolute advantage in making pizza, and If Caroline and Frances trade foods with each other, of root beer, and Frances's opportunity cost of making a pizza has a comparative advantage in making pizza. will trade pizza in exchange for root beer. The price of pizza can be expressed in terms of gallons of root beer. The highest price at which pizza can be traded that would make both roommates of root beer per pizza. better off is of root beer, and the lowest price that makes both roommates better off isarrow_forward
- Direction: Plot the Production Possibilities Frontier of the below-data with good X on the horizontal axis and good Y on the vertical axis. GOOD PRODUCTION ALTERNATIVES A B C D E X 0 15 18 21 24 Y 45 42 37 27 0 Question: Explain the different points on the curve. What does each point represent? Why is it important for an economy to be on its production possibilities frontier?arrow_forwardExercise 2 Suppose that each worker in the Foreign country can produce two cars or three TVs. Assume that Foreign also has four workers. a. Graph the production possibilities frontier for the Foreign country.arrow_forwardDraw the production possibilities frontier on a scale diagram, with the production of X on the horizontal axis and the production of Y on the vertical axis Annual Production of Y Annual Production of X 0 20 45 60 70 75 1300 1200 900 6:00 350 0 b. If the economy is producing 45 units of X and 900 units of Y, what is the opportunity cost of producing an extra 15 units of X. Show on graph. C. If the economy is producing 20 units of X and 800 units of Y, what is the opportunity cost of producing an extra 10 units of X. Show on graph.arrow_forward
- (Table: Four persons) The table lists the minutes that it will take four people to wash a car and to sort and fold a load of laundry. Use the data to answer the question. Table: Four persons Minutes it takes to: Wash a car Sort and fold a load of laundry Asad 150 50 Junko 120 50 Jason 90 45 Jen 80 45 Who has a comparative advantage in washing a car? Asad Jason Junko Jen Incorrectarrow_forwardUse the PPF to answer the following questions: D. Hard drives A 525 E. 450 400 350 300 250 200 150 100 50 5 10 15 20 25 30 35 40 45 50 Sweaters (thousands)arrow_forward8. Shifts in production possibilities Suppose the United States produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for alfalfa, an agricultural good, and industrial copiers, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a breakout of avian flu that sickens millions of workers. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. 540 450 PPF 380 270 180 90 PPF 100 200 300 400 500 600 ALFALFA (Millions of bushels) INDUSTRIAL COPIERS (Thousands)arrow_forward
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