Microeconomics (Book Only)
12th Edition
ISBN: 9781285738307
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 2, Problem 1WNG
To determine
Illustration of
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Diagrams 1 and 2 below depict the production possibility frontier (PPF) for Rosie’s Bakery. Answer the questions below and show all calculations where appropriate.
From Diagram 1, calculate the opportunity cost of increasing the production of cakes from 8 to 12 with the opportunity cost of increasing the production of cakes from 12 to 14. Show all calculations.
In Diagram 2, how would explain the shift from PPF1 to PPF2 at Rosie’s Bakery using economic theory?
Use the PPF to answer the following questions:
(a) At point F, how many sweaters are being produced? How many hard drives?
(b) Label points A-H as either efficient, inefficient, or unattainable.
(c) Can we determine if point F is productively efficient? If so, is it productively efficient?
(d) Can we determine if point F is allocatively efficient? If so, is it allocatively efficient?
In Kessy’s old kitchen, he could bake 10 cookies or mix 15 glasses of lemonade in a day. Now he has a bigger oven and kitchen.
Draw Kessy’s initial PPF assuming constant opportunity cost between cookies and lemonade. Label it PPF1. [For this question, let cookies be illustrated on the horizontal axis.]
Given PPF1, what is the opportunity cost of producing more cookies? In other words, how much lemonade must Kessy sacrifice to produce, say, one more cookie?
Draw Kessy’s new PPF (label it PPF2) after he receives the new appliances.
Chapter 2 Solutions
Microeconomics (Book Only)
Ch. 2.1 - Prob. 1STCh. 2.1 - Prob. 2STCh. 2.1 - Prob. 3STCh. 2.1 - Prob. 4STCh. 2 - Prob. 1VQPCh. 2 - Prob. 2VQPCh. 2 - Prob. 3VQPCh. 2 - Prob. 4VQPCh. 2 - Prob. 5VQPCh. 2 - Prob. 1QP
Ch. 2 - Prob. 2QPCh. 2 - Prob. 3QPCh. 2 - Prob. 4QPCh. 2 - Prob. 5QPCh. 2 - Prob. 6QPCh. 2 - Prob. 7QPCh. 2 - Prob. 8QPCh. 2 - Prob. 9QPCh. 2 - Prob. 10QPCh. 2 - Prob. 11QPCh. 2 - Prob. 12QPCh. 2 - Prob. 1WNGCh. 2 - Prob. 2WNGCh. 2 - Prob. 3WNGCh. 2 - Prob. 4WNGCh. 2 - Prob. 5WNGCh. 2 - Prob. 6WNGCh. 2 - Prob. 7WNGCh. 2 - Prob. 8WNGCh. 2 - Prob. 9WNG
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