Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 1, Problem 8P
To determine
The graphical analysis of present goods versus future goods to explain the differences in growth rates.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
es
On average, households in China save 40 percent of their annual income each year, whereas households in the United States save
less than 5 percent. Production possibilities are growing at roughly 9 percent annually in China and 3.5 percent in the United States.
Use graphical analysis of "present goods" versus "future goods" to explain the differences in growth rates.
Goods for the future (Capital)
PPC3
100
90-
80
70
60-
50-
40-
30-
20-
10
0
0
Production Possibilities
(United States)
PPC₂
PPC₁
B
10 20 30 40 50
A
60
70
Goods for the present
80 90 100
Future Goods
100
90-
80-
70
60-
50+
40
30-
20-
10-
0
PPC3
PPC₂
PPC₁
B
0 10
20
Instructions: Refer to the diagram on the left.
Which point best represents the combination of present and future goods in the U.S.? (Click to select)
Which dashed production possibilities curve best represents future growth in the U.S.?(Click to select)
Instructions: Refer to the diagram on the right.
Which point best represents the combination of present and…
565995
CALCULATIONS
Capital Goods
16
755559 CH
14
13
12
11
10
0 1
2
More ←
Saving
3
Consumption Goods Produced
Capital Goods Produced
4
5
6
7 8
Production Possibilities (Present)
Production Possibilities (Future)
9 10 11 12 13 14 15
Consumption Goods
More
Consumption
4.0
7.5
Help
Save & Exit
10. Jack and Jill work together at an IT company. They are asked to write a new
piece of code to fix a bug in some company software, and then they have to give a
presentation about it to their colleagues. Between the two of them, Jill works
faster. She could write the code in 6 hours, and prepare the presentation in 1
hour. Jack works slower. He would take 7 hours to write the code, and 2 hours to
prepare the presentation. Now assume that they have to divide their tasks so that
precisely one person works on the code and one person works on the presentation.
Who should work on what? Use the concept of comparative advantage in your
explanation.
Chapter 1 Solutions
Microeconomics
Ch. 1.2 - Prob. 1QQCh. 1.2 - Prob. 2QQCh. 1.2 - Prob. 3QQCh. 1.2 - Prob. 4QQCh. 1.A - Prob. 1ADQCh. 1.A - Prob. 2ADQCh. 1.A - Prob. 3ADQCh. 1.A - Prob. 1ARQCh. 1.A - Prob. 2ARQCh. 1.A - Prob. 1AP
Ch. 1.A - Prob. 2APCh. 1.A - Prob. 3APCh. 1.A - Prob. 4APCh. 1.A - Prob. 5APCh. 1.A - Prob. 6APCh. 1.A - Prob. 7APCh. 1.A - Prob. 8APCh. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8P
Knowledge Booster
Similar questions
- Nicolas Cage, an award winning and prolific actor, once had a net worth of about $150 million (he earned $40 million in 2009 alone!). By 2011, he was having to sell off much of his amassed collection of homes, cars, and novelties to pay off remaining debts and had a net worth of about $25 million. Ever wonder why he's in a new action movie on Netflix every other month? a. Move the point on the graph to represent the consumption decisions of Nicolas Cage in 2009 after he earned $40 million. Marginal Benefit Consumptionarrow_forward38// Assume that a consumer has a given budget or income of $10 and that she can buy only two goods, apples or bananas. The price of an apple is $2.00 and the price of a banana is $1.00. For this consumer, the opportunity cost of buying one more apple isarrow_forwardConsider the following production possibilities curve (PPC) for an economy that produces two goods- cotton and bananas, both measured in tonnes produced per year. (0, 1500) A (100, 1440) B Tonnes of Cotton 1500 1000 500 0 100 100 tonnes of cotton 360 tonnes of cotton 300 tonnes of cotton. (200, 1280) 920 tonnes of cotton. 200 Tonnes of Bananas (300, 920) 300 Suppose the economy is currently producing at Point C. What is the opportunity cost of increasing production of bananas to 300 tonnes at Point D? E (360, 500) F (400,0) 400arrow_forward
- 1. Consumption and saving definitions Suppose Karen gets a sales bonus at her place of work that gives her an extra $600 of disposable income. She chooses to spend $480 and save the remaining $120. Mathematically, it must always be true that: Consumption = =arrow_forwardmany countries produce a single good upon which much of their economy depends. That good might be coffee or wool or oil. How might a production possibilities curve help economists in such a country determine how to diversify their economyarrow_forward1) Helena earns $2000 this year and will earn $1500 the next year. The interest rate between each year is 10%. She wants to consume the same quantity each year. She wants to have spent all her money by the end of year 2. Warning: each question does build on each other a) How much would she save? How much would she consume? b) If she wins the lottery during the first year, raising her earnings to $10000 this year, how much would she save, how much would she consume? c) If she now wants to consume twice as much in year 1 as she does in year 2, how much would she save, how much would she consume? d) If she now has no preferences about her consumption, but she wants to save $5000 in year 1 (to buy a new car in year 2), how much would she consume in year 1 and year2?arrow_forward
- The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the associated flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households Which of the following statements regarding this economic model are true? O While simple, the circular-flow diagram can still be useful for the purposes of modeling how dollars and resources move throughout an economy. O Because it does not take into account international trade, the circular-flow diagram is useless for the purposes of modeling how dollars and resources move throughout an economy. O Because, in reality, the economy is very large, the simplicity of the circular-flow diagram makes it useless for the purposes of modeling how dollars and resources move throughout an economy. O Because it does not take into account the role of government, the circular-flow diagram…arrow_forwardConsider the standard Ramsey model with endogenous labor supply. Assume that the house- hold has a unitary time endowment that it can split between labor time (L;) and leisure time (1 – Lt). The household's problem is defined as follows: Σ Vo Bt. max Ct,Ct+1,Lt,Lt+1,Kt+1 t=0 s.t. K41 - Kį =r¡Kt +W¿Lt – Ct The representative firm maximizes profit as follows: max по — Lt,Kt Y; – w;Lt – (rt + 8)K; (1+r¿)* t=0 s.t. Y = AK, L -aarrow_forward4. We sometimes need to find out how long it will take a sum of money (or something else, such as earnings, population, or prices) to grow to some specified amount. For example, if a company’s sales are growing at a rate of 20% how long will it take sales to double? (Hint: Assume that your current level of sales is at 100 units and find out how long it will take to get to 200 units if sales grow at 20% each year. Solve for N. Make sure you put the PV or FV as a negative number.)arrow_forward
- 3. Shifts in production possibilities Suppose the United States produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities curve (also known as the production possibilities curve) for corn, an agricultural good, and airplanes, a capital good. Drag the production possibilities curve (PPC) on the graph to show the effects of an improvement in soil quality because of new fertilization techniques. 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 vill 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. 420 350 PPC 280 210 140 70 + PPC 40 80 120 160 200 240 CORN (Millions of bushels) AIRPLANES (Thous ands)arrow_forwardQ/ Country X and Country Y are neighbours. Both Country X and Country Y can produce two goods: food and clothing. In one week, Country X can produce 4,400 clothing units or 2,200 food units, or a mix of the two. In one week, Country Y can produce 5,000 clothing units or 2,000 food units, or a mix of the two.For both Country X and Country Y, their individual trade-offs between clothing units and food units are constant, regardless of how they allocate their time. Currently, Country X produces 2,400 clothing units and 1,000 food units per week while Country Y produces 2,500 clothing units and 1,000 food units per week. c. Which country has a comparative advantage in food production? Which country has acomparative advantage in clothing production? Illustrate your answer using the PPC and showall the calculations. d. Should Country X and Country Y specialize and trade with one another? Why?arrow_forwardQuestion Under what conditions would a transfer of income from the richest 10% of the population to the poorest 10% of the population increase aggregate consumption and decrease aggregate savings? Under what conditions would such a transfer decrease Consumption and increase Aggregate Savings? Carefully explain using graphical analysis where appropriate, making sure to define the key terms and relationships you use in your answer.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education