ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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The graph to the right depicts an economy, Home, which produces flowers and soybeans. Its
production possibilities frontier is shown as TT. One of Home's isovalue lines is also shown as VV.
Home exists and trades with a second country, Foreign which also produces flowers and
soybeans.
Assume that Home is maximizing its value of output.
1.) Using the point drawing tool, identify this maximizing point and label it with an X.
Also assume that Home consumers maximize their utility. The indifference curve for Home is
labeled IC.
2.) Using the point drawing tool, identify the point of consumption by Home consumers. Label this
point Z.
Carefully follow the instructions above and only draw the required objects.
Which of the following statements is true?
A. Home exports 4 units of soybeans.
B. Home imports 4 units of flowers.
C. Home imports 2 units of soybeans.
O D. Home exports 4 units of flowers.
C
26-
24-
22-
20-
18-
16-
14 12
14-
12-
10-
8-
6-
4-
2-
0-
0
Trade in the Standard Model (Home)
Soybean Production
-~
2
A.
4
6
IC
VV
TT
8 10 12 14 16 18 20 22 24 26
Flower Production
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Transcribed Image Text:The graph to the right depicts an economy, Home, which produces flowers and soybeans. Its production possibilities frontier is shown as TT. One of Home's isovalue lines is also shown as VV. Home exists and trades with a second country, Foreign which also produces flowers and soybeans. Assume that Home is maximizing its value of output. 1.) Using the point drawing tool, identify this maximizing point and label it with an X. Also assume that Home consumers maximize their utility. The indifference curve for Home is labeled IC. 2.) Using the point drawing tool, identify the point of consumption by Home consumers. Label this point Z. Carefully follow the instructions above and only draw the required objects. Which of the following statements is true? A. Home exports 4 units of soybeans. B. Home imports 4 units of flowers. C. Home imports 2 units of soybeans. O D. Home exports 4 units of flowers. C 26- 24- 22- 20- 18- 16- 14 12 14- 12- 10- 8- 6- 4- 2- 0- 0 Trade in the Standard Model (Home) Soybean Production -~ 2 A. 4 6 IC VV TT 8 10 12 14 16 18 20 22 24 26 Flower Production
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