One last time, please consider this PPF, which describes an economy in autarky that produces guns and butter: From this PPF, we can see and that that inputs are the slope of the PPF will in absolute value terms as butter production increases.
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- SMARTPHONES (Millions) 40 20 0 PPF 0 40 60 CORN (Millions of bushels) Which of the following is true regarding this economic model? O In order to construct such a model, an economist would need real life data regarding countries that produce only two goods. O The fact that there are only two goods produced in this theoretical economy, when, in reality, economies produce many more types of goods, means this model is generally useless. O This PPF is not an economic model. O The fact that there are only two goods produced in this theoretical economy is a simplifying assumption that still allows economists to demonstrate key economic concepts. 20 80 100Suppose an economyuses two resorces (labor and capital) to produce two goods (wheat and cloth). Captial is relativley more useful in prducing cloth, and labor ir relativley more useful in prducing wheat. If the supply of cpatial falls by 10% and the suppy of labor increases by 10%, how will the PPF for wheat and cloth change?.5 The doctrine of comparative advantoge was first put forth by aved put of Select one: O a John Maynard Keynes b. David Ricardo O C. Adam Smith O d Ricky Ricardo Clear my choice
- The following graph shows the same PPF for Congaree as before, as well as its initial consumption at point A. As you did for Glacier, place a black point (plus symbol) on the following graph to indicate Congaree's consumption after trade. BASIL (Millions of pounds) 48 42 3 36 30 24 18 PPF 12 6 0 0 OO O True 6 O False Congaree 12 18 24 30 36 ALMONDS (Millions of pounds) 42 48 True or False: Without engaging in international trade, Glacier and Congaree would have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.) Consumption After Trade (?)Recently, the market for beef has been experiencing a major change. In general,there has been a decline in demand for beef as consumers have turned more to fish andchicken or have simply been eating less meat overall. On the other hand, there has been adramatic increase in demand for “organic” or naturally raised beef. In fact, organic beef sellsfor a substantial premium over regular beef.a. Use comparative statics analysis to analyze the short-run and long-run effects of these shifts in demand.b. Answers should include a graphples and no change in ce cream Od.+1 pie and +2 ice cream QUESTION 2 Pie Tim Pies Deve 10 The graphs above de loe Cream loe Cream make in a given weekend. Use this to answer the questions that follow. Which of the following is true? O a. Tim has the absolute advantage at both ice cream and pies and Dave has the comparative advantage at ice cream Ob. Dave has the comparative advantage at pies and Tim has the comparative advantage at ice cream OC. Tim has the comparative advantage at ice cream and pies Od. Dave has the absolute and comparative advantage at ice cream and Tim has the absolute and comparative advantage at pies QUESTION 3
- Perry's Production Possibilities Frontier CC Jordan's Production Possibilities Frontier 1poems 20 Tpoems 20 18 18 16+ 16 14 + 14 12 12 10 10 8 8 6 6 4 4 4 6 7 8 novels 1 3 4 5 6 novels Refer to Figure 3-15. Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry. Which of the following combinations of novels and poems could Jordan then consume, assuming Jordan specializes in novel production and Perry specializes in poem production? O a. 1 novel and 14 poems O b. 2 novels and 8 poems O c. 3 novels and 6 poems O d. 4 novels and 2 poemsStudent explain lmportance of Port tothe EconomyRequired information Delow is a procuction possibilities curve involving toa and vidoos 0 s00 0 700 Ovaniy of vides per year in thenand Refer to the graph above to answer this question What is indicated by the shape of both the PPI and the PPII curves? Owently ef pw y
- Figure 1 The production possibility frontier ABCDE is a production possibility frontier. It shows the different combinations of goods which can be produced if all resources are fully and efficiently utilised. The economy can produce at any point on the line. It cannot produce at G because the PPF shows the maximum that can be produced. It can produce within the PPF,05 such as at F, but less will be produced than the maximum possible. Non-manufactured goods 50 40 30 20 10 0 A 10 B Ti C 20 30 Manufactured goods G D E 40In a microeconomic model, how would you differentiate between an 'exogenous' variable and an 'endogenous' variable? O Endogenous variables are those determined within the model, while exogenous variables are given from outside the model. O Exogenous variables are those which economists do not study, while endogenous variables are heavily studied. O Exogenous variables are variables that economists cannot measure, while endogenous variables are measurable. Exogenous variables cannot influence endogenous variables in any economic model. O More than one of the above.Homework (Ch 03) Attempts: Keep the Highest: 3/4 2. Gains from trade Consider two neighboring island countries called Contente and Felicidad. They each have 4 million labor hours available per week 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 Jeans Country (Bushels per hour of labor) (Pairs per hour of labor) Contente 6. 12 Felicidad 16 Initially, suppose Contente uses 1 million hours of labor per week to produce rye and 3 million hours per week to produce jeans, while Felicidad uses 3 million hours of labor per week to produce rye and 1 million hours per week to produce jeans. Consequently, Contente produces 6 million bushels of Is rye and 36 million pairs of jeans, and Felicidad produces 12 million bushels of rye and 16 million pairs of jeans. Assume there are no other countries willing to trade goods, so, in the absence of trade between these two countries, each…