Principles of Microeconomics, California Edition
2nd Edition
ISBN: 9780393622102
Author: Dirk Mateer, Lee Coppock
Publisher: NORTON
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Question
Chapter 2, Problem 1SP
(a)
To determine
Calculate the
(b)
To determine
Calculate the
(c)
To determine
Specialization in production of artists.
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Suppose you and a friend are stranded on an island and must gather firewood and catch fish to survive. Through experience, you know that if each of you spends an entire
day on either activity, the result is given in the following table:
You
Your Friend
Fish
7
8
Firewood
6 bundles
3 bundles
You and your friend decide that you should each specialize so that one person catches fish while the other gathers firewood. But who should do which task?
a. What is the opportunity cost for you to gather an additional bundle of firewood?
fish.
The opportunity cost for you to gather an additional bundle of firewood is
(Round your answer to two decimal places.)
What is your friend's opportunity cost of gathering an extra bundle of firewood?
Your friend's opportunity cost of gathering an extra bundle of firewood is fish.
(Round your answer to two decimal places.)
b. Assuming that you and your friend specialize, what allocation of tasks maximizes total output for your one day of joint effort?
To…
Elif can produce 6 pies or 30cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1 hour.
On the PPF lines, show what Elif produces and what Ahmet produces when they specialize.
When they specialize and trade, what are the total gains from trade?
If Elif and Ahmet share the total gains equally, which quantities of pies and cakes do they trade?
What does a PPF show? What is a trade-off?
Chapter 2 Solutions
Principles of Microeconomics, California Edition
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