ency in the pro model Suppose South Africa produces only two goods: barley and laptops. The following graph shows South Africa's current production possibilities curve, along with six output combinations represented by black points (plus symbols) labelled A to F. 100 PPC 60 20 20 40 60 80 100 BARLEY (Millions of bushels) LAPTOPS (Milliors)

The accompanying graph contains the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before?

Consider two neighboring island countries called Felicidad 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. Country Jeans Rye (Pairs per hour of labor) (Bushels per hour of labor) Felicidad 5 20 Contente 8 16   Initially, suppose Contente uses 1 million hours of labor per week to produce jeans and 3 million hours per week to produce rye, while Felicidad uses 3 million hours of labor per week to produce jeans and 1 million hours per week to produce rye. Consequently, Felicidad produces 15 million pairs of jeans and 20 million bushels of rye, and Contente produces 8 million pairs of jeans and 48 million bushels of rye. 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…

Level 2: Opportunity Cost, Comparative Advantage, and Specialization   The opportunity cost of gathering firewood is then the calories of fish given up per log of firewood gained. (Fill in the blanks in the formula and perform the calculation). Opportunity Cost of Gathering =   cals fish   logs woo   = calories per log