Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 2, Problem 2PA
Subpart (a):
To determine
Production possibility frontier .
Sub part (b):
To determine
Production possibility frontier.
Sub part (c):
To determine
Production possibility frontier.
Sub part (d):
To determine
Production possibility frontier.
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Imagine a society that produces military goods and consumer goods, which we’ll call “guns” and “butter.”
Draw a production possibilities frontier for guns and butter. Using the concept of opportunity cost, explain why it most likely has a bowed-out shape.
Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient.
Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want A smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose.
Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger “peace dividend,” measured by the increase in butter production? Explain.
Imagine a society that produces military goods and consumer goods, which we’ll call “guns” and “butter.”
Draw a production possibilities frontier for guns and butter. Explain why it most likely has a bowed out shape.
Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient.
Imagine that the society has two political parties, called the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point the Doves might choose.
Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger “peace dividend,” measured by the increase in butter production? Explain.
Imagine a society that produces Capital goods and consumer goods.
Draw a production possibilities frontier for capital and consumer goods. Explain why it most likely has a bowed-out shape.
Show a point that is impossible for the economy to achieve. Show a point that is feasible but inefficient.
Imagine that the society has two political parties, party A (who wants capital goods) and the party B (who want a consumer goods). Show a point on your production possibilities frontier that the part A might choose and a point the party B might choose.
Imagine that our progressive neighboring country reduces the size of its consumer goods. As a result, both the Party A and B reduce their desired production of consumer goods by the same amount. Which party would get the bigger “technology dividend,” measured by the increase in capital production? Explain.
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Principles of Microeconomics (MindTap Course List)
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- Imagine a society that produces military goods andconsumer goods, which we’ll call “guns” and “butter.”a. Draw a production possibilities frontier for gunsand butter. Using the concept of opportunity cost,explain why it most likely has a bowed-out shape.b. Show a point on the graph that is impossible forthe economy to achieve. Show a point on thegraph that is feasible but inefficient.c. Imagine that the society has two political parties,called the Hawks (who want a strong military)and the Doves (who want a smaller military).Show a point on your production possibilitiesfrontier that the Hawks might choose and a pointthat the Doves might choose.d. Imagine that an aggressive neighboring countryreduces the size of its military. As a result, boththe Hawks and the Doves reduce their desiredproduction of guns by the same amount. Whichparty would get the bigger “peace dividend,”measured by the increase in butter production?Explain.arrow_forwardThe three economic questions that every society must answer are OA. What are the prices of goods, how are they determined, and who will pay for them? OB. What economic system will be used, how will it be implemented, and who will make market decisions? OC. What goods will be produced, how will they be produced, and who will receive the goods? OD. What kind of government will the society have, how will it be run, and who will run it? Centrally planned economies allocate resources based on decisions by while market economies answer these questions through decisions made byarrow_forwardWhat is the production possibilities frontier? A. a map that shows areas of the world in which capitalist production is highest B. a map that shows the frontier beyond which technological innovation is unprofitable C. a graph that shows the various combinations of resources that can be used to produce a given level of output D. a graph that shows the various combinations of output the economy can possibly produce given the available resources and technologyarrow_forward
- The first principle of economics is that people face trade-offs. Use a production possibilities frontier to illustrate society’s trade-off between two “goods”—a clean environment and the quantity of industrial output. What do you suppose determines the shape and position of the frontier? Show what happens to the frontier if engineers develop a new way of producing electricity that emits fewer pollutants.arrow_forwardDraw and explain a production possibilities frontier for an economy that produces cheese and milk. What happens to this frontier if a disease kills half of the economy’s cows? Use a production possibilities frontier to describe the idea of “efficiency.” kindly solve both parts.arrow_forwardWhat does the Powerbar model tell us about how creativity fits into a market economy?arrow_forward
- Eva finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time. For instance, if she chooses to exercise, she would need to give up watching TV. This example best illustrates which of the following four key ideas in Economics? Select one: a. the invisible hand principle b. gains from trade c. opportunity cost d. net marginal benefitarrow_forwardDraw a production possibilities curve for food and clothing. If you are operating on the curve, what is the opportunity cost of producing more clothing? If you are on the curve, is it possible to increase production of one good without decreasing the production of the other?arrow_forwardMany people think that soda consumption also leads to increased obesity. Many schools have banned the sale of soda in vending machines. Use the idea of opportunity costs to explain why some people think these bans will reduce consumption. Do you agree?arrow_forward
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