PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Chapter 2, Problem 4P
(a)
To determine
Draw Helen’s
(b)
To determine
The attainable points in Figure 1.
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Once again, consider Babs and Donna, who can each produce cake, beer, or some combination of
the two using only 40 hours of labor each. Babs can produce a maximum of 50 cakes if she
produces no beer, and 100 units of beer if she produces no cake. Donna can produce a maximum
of 100 cakes with no beer produced; if she makes no cake, she can produce 120 units of beer.
In autarky, each producer spent half of her time producing cake and the other half producing
beer. But now let's say that Babs and Donna decide to trade with each other. They decide that
each producer will fully specialize in the good where she has comparative advantage. Later, they
will work out the details on how much beer will trade for how many cakes and vice versa.
Calculate the gains in trade in cakes that Babs and Donna together (as a group) will experience
due to trading. In other words, tell me how many more cakes the two of them can now consume
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(Carefully…
Given that Nathan has 10 acres and can grow 15 bales of hay or 40 bushels of corn on an acre, while Simon has 10 acres and can grow 20 bales of hay or 35 bushels of corn per acre.
I am trying to come up with the equations to find out the maximum amount of produce they can jointly produce.
Consider a society consisting only of Helen, who allocates her time between sewing dresses and baking bread. Each hour she devotes to sewing dresses yields 4 dresses and each hour she devotes to baking bread yields 8 loaves of bread.
Suppose that a new sewing machine is introduced that enables Helen to sew 8 dresses per hour rather than only 4.
If Helen works a total of 8 hours per day, show how this development shifts her production possibilities curve on the graph below.
draw Helen's new PPC.
Using the graph above, indicate if the following points are attainable and/or efficient before and after the introduction of the sewing machine.
16 dresses per day, 48 loaves per day:
before the sewing machine and after its introduction.
24 dresses per day, 16 loaves per day:
before the sewing machine and after its introduction.
An increase in productivity with respect to any one good increases our options for producing and consuming all other goods.” Which of the…
Chapter 2 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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