EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 19, Problem 1SP
(a):
To determine
(b):
To determine
Opportunity cost of producing meatballs in P and that of harvesting clams in P.
(c):
To determine
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Gary and Brenda both have similar businesses in the garment industry making caps and backpacks. In one day, Gary can make 60 caps and 12 backpacks when he divides his production resources equally between the two products. In one day, Brenda can produce 80 caps and 20 backpacks. Answer the following questions and show all calculations to support your answers.
a. Who has the comparative advantage in producing backpacks? Explain with calculations.b. What is Brenda's opportunity cost of making a cap compared to Gary's? Explain with calculations.c. Based on your calculations in a) and b) above, who should specialize in making what if they intend to trade? Explain with calculations.d. If Gary and Brenda decide to specialize in what they do best, what would be the new production per day for each of them? Explain with calculations.e. If Gary and Brenda decide to trade, what would be the terms of trade for a backpack and how does each benefit from trading? Explain with calculations.
The figure below depicts the production possibilities
curve (PPC) of a country. It also depicts the
consumption possibilities curve (CPC) when the country
is engaged in trade with one other country. Point C is
this country's consumption when that trade occurs.
Quantity of 350
good y
300
250
200
150
100
50
0
0
20
40
19
C
60
80
100
120
Quantity of good x
Calculate how much this country trades with the other
country in good y when the two countries engage in
free trade. Enter a whole number only. Enter a positive
number if this country exports good y, and a negative
number if it imports it. Enter O if the answer cannot be
obtained with the information given. Since this is a
graphical question, approximate answers (within 20 of
the exact answer) are accepted. Hint: consider how
much the country produces and consumes this good.
The countries of Sanaton and Microtania each produce two goods: Airplanes and Computers. The table below lists the
opportunity costs associated with producing each good, for each country.
Country Opportunity cost of producing 1 Airplanes Opportunity cost of producing 1 Computers
Sanaton
4 Computers
0.25 Airplanes
2 Airplanes
Microtania
0.5 Computers
Currently, Sanaton does not trade with Microtania, and on its own produces 19 Airplanes and 24 Computers. On their own,
Microtania produces 30 Airplanes and 35 Computers.
Calculate total world supply:
Airplanes:
→
Computers:
If Sanaton decided to change its production of Airplanes by -2, calculate the change in the production of Computers:
If Microtania changed its production of Airplanes by 8, calculate the change in production of Computers:
A
Chapter 19 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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