Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 2, Problem 2DQ
To determine
The self-interest achieves of a society’s economic goals.
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Suppose there exist two imaginary countries, Yosemite and Sequoia. Their labor forces are each capable of supplying four million hours per day that
can be used to produce pistachios, chinos, or some combination of the two. The following table shows the amount of pistachios or chinos that can be
produced by one hour of labor.
Country
Yosemite
Sequoia
Pistachios
(Pounds per hour of labor)
8
LO
5
Chinos
(Pairs per hour of labor)
16
20
With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of
resources for producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at
prices of $40, $60, $60, and $20, respectively. Assume the firm can sell these 400 loaves at $2 per unit.
Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in
front of those numbers.
What is the firm's total revenue?
What is its total cost?
2$
Calculate the amount of economic profit or loss.
2$
Will it continue to produce banana bread?
(Click to select) ♥
If this firm's situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?
(Click to select) ♥
With current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the firm can sell these 400 loaves at $2 per unit, what is its total revenue? Its total cost? Its profit or loss? Will it continue to produce banana bread? If this firm’s situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?
Chapter 2 Solutions
Microeconomics
Ch. 2.2 - Prob. 1QQCh. 2.2 - Prob. 2QQCh. 2.2 - Prob. 3QQCh. 2.2 - Prob. 4QQCh. 2 - Prob. 1DQCh. 2 - Prob. 2DQCh. 2 - Prob. 3DQCh. 2 - Prob. 4DQCh. 2 - Prob. 5DQCh. 2 - Prob. 6DQ
Ch. 2 - Prob. 7DQCh. 2 - Prob. 8DQCh. 2 - Prob. 9DQCh. 2 - Prob. 10DQCh. 2 - Prob. 11DQCh. 2 - Prob. 12DQCh. 2 - Prob. 13DQCh. 2 - Prob. 1RQCh. 2 - Prob. 2RQCh. 2 - Prob. 3RQCh. 2 - Prob. 4RQCh. 2 - Prob. 5RQCh. 2 - Prob. 6RQCh. 2 - Prob. 7RQCh. 2 - Prob. 8RQCh. 2 - Prob. 1PCh. 2 - Prob. 2PCh. 2 - Prob. 3PCh. 2 - Prob. 4P
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- Suppose, under license from Apple, a factory in China buys all the components for an iPhone from multiple manufacturers for $150 They assemble the iPhone and sell it to Apple for $350. Apple then sells the phone to customers for $699. How much value does Apple add during their step in the production process? Ⓒ$1.50 1200 O $349 O $350arrow_forward12 Mk Mc Graw Hill Connect 5. Refer to the following production possibilities table for con. sumer goods (automobiles) and capital goods (forklifts): LO1.6 a. Show these data graphically. Upon what specific assump- tions is this production possibilities curve based? b. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increas- ing opportunity costs: its shape or its length? c. If the economy characterized by this production possibilities table and curve is producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources? d. Is production at a point outside the production possibilities curve currently possible? Could a future advance in technol- ogy allow production beyond the current production possi- bilities curve? Could international trade allow a country to consume beyond its current production possibilities curve?!…arrow_forwardWith current technology, suppose a firm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $ 40, $60, $60, and $20, respectively. Assume the firm can sell these 400 loaves at $ 2 per unit. 1). What is its total revenue? 2). What is its total cost? 3). What is the firm's profit or loss? The firm generates an economic ( choose one -a) loss, b) profit ) of...? 4). Will it continue to produce banana bread? ( Yes or No) 5). If this firm's situation is typical for the other makers of banana bread, will resources flow toward or away from this bakery good?arrow_forward
- Assume that your company produces two goods: laptops and tablets. Assume aslo that your company has limited resources( including time) to devote to producing these items. Now assume that the laptop team does something to improve the efficiency of making laptops, while the tabley holds to old methods. Given the change you can a) only increase your production of laptops b) only increase your production of tablets c) increase production of both items d) not increase your production in either tablets or laptops.arrow_forward2. Suppose that two countries can produce wheat or cotton. If country A produces only wheat it can produce 55 units of wheat, and if it produces only cotton it can produce 35 units of cotton. If country B produces only wheat it can produce 65 units of wheat, and if it produces only cotton it can produce 45 units of cotton. Given the production possibilities curves above, which of the following would be feasible terms of trade between country A and country B? a. one unit of wheat for 0.75 unit of cotton. b. one unit of cotton for 1.5 units of wheat. c. one unit of wheat for 0.55 unit of cotton. d. one unit of cotton for 1.67 units of wheat. e. all of the above are feasible terms of trade. f. none of the above are feasible terms of trade.arrow_forwardWith current technology, suppose a fifirm is producing 400 loaves of banana bread daily. Also assume that the least-cost combination of resources in producing those loaves is 5 units of labor, 7 units of land, 2 units of capital, and 1 unit of entrepreneurial ability, selling at prices of $40, $60, $60, and $20, respectively. If the fifirm can sell these 400 loaves at $2 per unit, will it continue to produce banana bread? If this fifirm’s situation is typical for the other makers of banana bread, will resources flow to or away from this bakery good?arrow_forward
- Maya and Max are neighbors. Each grows lettuceand tomatoes in their gardens. Maya can grow45 heads of lettuce or 9 pounds of tomatoes thissummer. Max can grow 42 heads of lettuce or6 pounds of tomatoes this summer. If Maya andMax specialize and trade, the price of tomatoes (interms of lettuce) would be as follows: 1 pound oftomatoes would cost between ______ and ______pounds of lettucearrow_forwardThe graph below shows production possibilities frontiers for Cornelius and David, two priests that aid the Mondoshawan race. David is Cornelius' apprentice, and they each spend their time either deciphering old prophecies or developing plans to save the world (which comes in handy later). Use this information to answer the following 3 questions. Plans 10 9 8 7 6 LO 5 4 3 2 1 8° Cornelius David 0 1 2 3 4 5 c. Both (a) and (b). d. Neither (a) nor (b). 6 7 8 b. 10 translations and 4 plans. C. 5 translations and 11 plans. d. 9 translations and 9 plans. 9 Translations 10 1. (Cornelius and David) Which of the following statements is true? a. Cornelius' opportunity cost of one translation is ½ of a plan. b. Cornelius' opportunity cost of one translation is less than David's opportunity cost of one translation. 2. (Cornelius and David) If David and Cornelius engage in trade, which of the following points is both feasible and efficient in production? a. 18 translations and 14 plans.arrow_forward11.Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve: LO5 a.The quality of education increases. b.The number of unemployed workers increases. c.A new technique improves the efficiency of extracting copper from ore. d.A devastating earthquake destroys numerous production facilities.arrow_forward
- Suppose that the productivity per worker in the milk and cranberry juice industries of Southland and Northland are as follows: Output in Thousands of Litres Milk Cranberry Juice Northland 6 Or 3 Sounthland 2 Or 1 a) Which country has the absolute advantage in producing milk? b) Which country has the absolute advantage in producing cranberry juice? c) Which country has the comparative advantage in producing milk? d) Which country has the comparative advantage in producing cranberry juice? e) According to the theory of comparative advantage, will there be trade? If yes, what is the direction of trade?arrow_forwardGreece and Finland produce and consume two goods, timber (T) and dairy product (D). Labor is the sole factor of production in the two countries. Greece is endowed with Lº =30,000 labor hours (1. hrs) and Finland is endowed with L =15,000 labor hours (1. hrs). In Greece it takes one (1) 1. hr to produce a ton of good (T), and one fourth (1/4) of a 1. hr to produce a ton of good (D). In Finland, labor productivity in good (T) is twice as high as labor productivity in good (T) in Greece, and labor productivity in good (D) is twenty-five percent (25%) lower relative to labor productivity in good (D) in Greece. Consumer preferences in the two countries are rigid in the sense that whatever the relative prices of the two goods are, residents in Greece always consume three-fourths (3/4) of the country's production, and residents in Finland consume two-thirds (2/3) of its production. Questions I Suppose the two countries engage in international trade, and that the international relative price…arrow_forward2 B agriculture Here's a production possibility frontier graph. In this example.... At point E, approximately what is the cost of another unit of industry? O6 units of agriculture O 4 units of agriculture 9 10 11 O2 units of agriculture O 1 unit of agriculture O 0 units of agriculturearrow_forward
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