Consider the PPF for a Mars colony depicted in the picture. The PPF shows combinations of habitats and spacecraft that could be produced. Suppose that the colony is currently producing 3 spacecraft and 8 habitats but is thinking about producing an additional spacecraft. What is the opportunity cost of producing this spacecraft in terms of habitats? 15 14 13 12 11 10 PPE 9 8 7 6 5 4 3 2 Habitats 1 0 1 2 3 (3,8) 4 (4, 6) 5 6 7 Spacecraft 8 9

Consider the PPF for a Mars colony depicted in the picture. The PPF shows combinations of habitats and spacecraft that could be produced. Suppose that the colony is currently producing 3 spacecraft and 8 habitats but is thinking about producing an additional spacecraft. What is the opportunity cost of producing this spacecraft in terms of habitats? 15 14 13 12 11 10 PPE 9 8 7 6 5 4 3 2 Habitats 1 0 1 2 3 (3,8) 4 (4, 6) 5 6 7 Spacecraft 8 9

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter2: Economic Tools And Economic Systems

Section: Chapter Questions

Problem 3.5P

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scenario Production Advantage and Opportunity CostsAssume there are two countries, the United States and France, and two goods, automobiles andcomputers.The table presented below shows the number of automobiles and computers that the United States andFrance can produce with the same amount of resources.United States FranceAutomobiles 120 100Computers 60 55Source: Pearson Education Inc. 1.1 Which country has an absolute advantage in computer production? Motivate your answer.1.2 Which country has a comparative advantage in the production of automobiles? Motivateyour answer. 1.3 Assume these countries trade with one another under the conditions of free trade. Whichcountry will specialise in the production of automobiles? Motivate your answer. 1.4 If free trade exists between the United States and France, what are the highest and lowestlevels for the price of an automobile (expressed in terms of computers)? Motivate youranswer by stating which level favours the United States and France.
A nation with fixed quantities of resources is able to produce any of the following combinations of bread and ovens:Bread (tons) Oven (000’s)60 050 1240 2230 3020 3610 40 0 42These figures assume that a certain number of previously produced ovens are available in the current period for baking bread.a. Using data in the table, graph the ppf (with ovens on the vertical axis)b. What happens to the opportunity cost of bread – measured in number of ovens—as bread production increases from 0 to 10 tons, from 10 to 20 tons, from 20 to 30 tons, and so on?c. If this country chooses to produce both bread and ovens, what will happen to the ppf over time? Why? Select one:a. Remains stagnant b. Decline over time towards inefficiencyc. Increase over time and declined. Increase over time towards growth
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