Macroeconomics (12th Edition) (Pearson Series in Economics)
12th Edition
ISBN: 9780133872644
Author: Michael Parkin
Publisher: PEARSON
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Question
Chapter 2, Problem 1SPA
(a)
To determine
Identify the role of scarcity on
(a)
Expert Solution
Explanation of Solution
Figure 1 illustrates the PPF of Company B.
In Figure 1, the x-axis shows food crops and the y-axis shows ethanol. The PPF shows the production combinations of ethanol and food crops. The production combinations of these commodities lie beyond the PPF and are not attainable with the given resources; this indicates the concept of scarcity. The movement along the PPF also indicates scarcity because when one good produces more, other goods are reduced.
Economics Concept Introduction
Scarcity: Scarcity refers to the limited availability of resources than the required level.
Production possibility frontier: Production possibility frontier shows the boundary between the combination of two goods and services that can produced at the given level of resources.
(b)
To determine
Identify the concept of production efficiency.
(b)
Expert Solution
Explanation of Solution
A production possibility frontier shows the combination of two commodities that can be produced at the given level of resources. Therefore, the combinations of commodities that lie along the PPF indicate efficient production levels. In this case, if Company B produces 40 barrels of ethanol per day, then the production of food per day needed to achieve the production efficiency will be 3 tons.
Economics Concept Introduction
Efficient production: Efficient production shows the combinations of two commodities that lie along the PPF.
(c)
To determine
Identify the concept of tradeoff in a PPF.
(c)
Expert Solution
Explanation of Solution
A movement along the PPF curve explains that producing more of one good leads to producing less of another good. Therefore, there is a tradeoff that exists between the commodities; it is also noted that this type of tradeoff exists only at an efficient production level. In this case, Company B has limited resources and technology. Therefore, an increase in the production of one good decreases the production of the other good. As a result, Company B will face a tradeoff on its PPF.
Economics Concept Introduction
Production possibility frontier: Production possibility frontier shows the boundary between the combination of two goods and services that can be produced at the given level of resources.
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2. Comparative and absolute advantage
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200
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5.
China is able to produce turnips and potatoes in combinations represented by the following table.
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and 10
and 20
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producing another potato at each production point. Explain.
Comparative and absolute advantage Elijah and Aneesha are farmers. Each one owns an 18-acre plot of land. The following table shows the amount of squash and maize each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing squash or maize or to produce squash on some of the land and maize on the rest. Squash Maize (Pounds per acre) (Pounds per acre) Elijah 12 3 Aneesha 18 6 On the following graph, use the blue line (circle symbol) to plot Elijah's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Aneesha's PPF. Elijah's PPF Aneesha's PPF 0 90 180 270 360 450 540 630 720 810 900 180 162 144
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Chapter 2 Solutions
Macroeconomics (12th Edition) (Pearson Series in Economics)
Ch. 2.1 - Prob. 1RQCh. 2.1 - Prob. 2RQCh. 2.1 - Prob. 3RQCh. 2.1 - Prob. 4RQCh. 2.1 - Prob. 5RQCh. 2.1 - Prob. 6RQCh. 2.2 - Prob. 1RQCh. 2.2 - Prob. 2RQCh. 2.2 - Prob. 3RQCh. 2.2 - Prob. 4RQ
Ch. 2.2 - Prob. 5RQCh. 2.3 - Prob. 1RQCh. 2.3 - Prob. 2RQCh. 2.3 - Prob. 3RQCh. 2.3 - Prob. 4RQCh. 2.3 - Prob. 5RQCh. 2.4 - Prob. 1RQCh. 2.4 - Prob. 2RQCh. 2.4 - Prob. 3RQCh. 2.4 - Prob. 4RQCh. 2.4 - Prob. 5RQCh. 2.5 - Prob. 1RQCh. 2.5 - Prob. 2RQCh. 2.5 - Prob. 3RQCh. 2 - Prob. 1SPACh. 2 - Prob. 2SPACh. 2 - Prob. 3SPACh. 2 - Prob. 4SPACh. 2 - Prob. 5SPACh. 2 - Prob. 6SPACh. 2 - Prob. 7SPACh. 2 - Prob. 8SPACh. 2 - Prob. 9SPACh. 2 - Prob. 10SPACh. 2 - Prob. 11APACh. 2 - Prob. 12APACh. 2 - Prob. 13APACh. 2 - Prob. 14APACh. 2 - Prob. 15APACh. 2 - Prob. 16APACh. 2 - Prob. 17APACh. 2 - Prob. 18APACh. 2 - Prob. 19APACh. 2 - Prob. 20APACh. 2 - Prob. 21APACh. 2 - Prob. 22APACh. 2 - Prob. 23APACh. 2 - Prob. 24APACh. 2 - Prob. 25APA
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