Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 2, Problem 6P
To determine
The effect on PPF for Wheat and cloth if the supply of capital falls by 10% and the supply of labor increases by 10%.
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6. Shifts in production possibilities
Suppose Argentina produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities curve (PPC)
for barley, an agricultural good, and airplanes, a capital good.
Drag the production possibilities curve (PPC) on the graph to show the effects of a time-saving innovation in the manufacturing of airplanes.
Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will
snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.
AIRPLANES (Thousands)
180
150
120
8
O
60
30
0
0
70
PPC
140
210
280
BARLEY (Millions of bushels)
350
420
PPC
4. Shifts in production possibilities
Suppose Spain produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for
alfalfa, an agricultural good, and locomotives, a capital good.
Drag the production possibilities frontier (PPF) on the graph to show the effects of a breakout of avian flu that sickens millions of workers.
Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will
snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.
(?
420
PPF
350
280
210
140
70
PPF
40
80
120
160
200
240
ALFALFA (Millions of bushels)
LOCOMOTIVES (Thousands)
If this economy devotes all of its resources to the production of notepads, then it will produce
Chapter 2 Solutions
Econ Micro (book Only)
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Similar questions
- 4. Shifts in production possibilities Suppose the United Kingdom produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for barley, an agricultural good, and cars, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of an immigration law that results in fewer workers entering the country. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. ? CARS (Thousands) 300 250 200 150 100 50 0 0 80 PPF 160 240 320 BARLEY (Millions of bushels) 400 480 6 PPFarrow_forward4. Shifts in production possibilities Suppose France produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for barley, an agricultural good, and cars, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a technological advance in medicine that allows workers to live longer and have extended careers. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. 600 500 PPF 400 300 200 100 PPF 60 120 180 240 300 360 BARLEY (Millions of bushels) CARS (Thousands)arrow_forward8. Economic growth The following graph shows the production possibilities curve (also known as the production possibilities frontier) of an economy that produces cars and computers. Suppose that a rise in this economy's saving rate allows for investment in modern, efficient manufacturing plants. Adjust the production possibilities curve (PPC) to show the economy's new production possibilities after the rise in the saving rate. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. QUANTITY OF CARS (Mor) 24 PPC 5 10 QUANTITY OF COMPUTERS (Mor) 15 Suppose society faces a broad tradeoff between allocating resources to the production of investment goods (computers) and consumption goods (cars) before the rise in the saving rate described above. Which of the following events…arrow_forward
- 3. Economic growth The following graph shows the production possibilities curve (PPC) of an economy that produces food and computers. Suppose that a series of natural calamities and climate changes significantly reduce the economy's endowment of natural resources and damages its productivity capacity. Adjust the PPC to show the economy's new production possibilities after the decrease in natural endowment. QUANTITY OF FOOD (Millions of pounds) 32 24 16 0 0 5 PPC 10 15 QUANTITY OF COMPUTERS (Millions of computers) 20 PPC Consider the direction in which you shifted the PPC on the graph. This type of shift of the PPC generally means that GDP that the population in this economy does not change. In such a case, GDP per capita of this economy experiences economic growth. Assume . This means the economyarrow_forward2 The Soviet Union's economy grew rapidly in terms of GDP per hour worked in the 1950s, but eventually this growth slowed. Why did this occur? Capital per hour worked (labor) grew rapidly from 1950 to 1980, but technological change occurred very slowly. Capital per hour worked (labor) grew slowly, but technological change grew very rapidly. Increasing implementation of new technologies eventually suffered diminishing marginal returns. The centrally planned economy invested too heavily in technological change. Consumption goods eventually took priority.arrow_forward4. Shifts in production possibilities Suppose the fictional country of Cuyahoga produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for millet, an agricultural good, and electric scooters, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a technological advance in medicine that allows workers to live longer and have extended careers. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. ELECTRIC SCOOTERS (Thousands) 600 500 400 300 200 100 0 0 60 PPF 120 180 240 MILLET (Millions of bushels) 300 360 PPFarrow_forward
- 4. Shifts in production possibilities Suppose Spain produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for alfalfa, an agricultural good, and locomotives, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of an Improvement in soil quality because of new fertilization techniques. Note: Select either end of the curve on the graph to make the endpoints appear, Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and It snaps back to its original position, just drag it a little farther. A20 350 PPF 280 210 140 70 PPF 40 80 120 160 200 240 ALFALFA (Millons of bushels) LOCOMOTIVES (Thousands)arrow_forwardNabia Pada 15 10 Corn Corn (units) 10 (units) 60 24 30 Wheat Wheat (units) (units) In Exhibit above, the production possibilities curves of wheat and corn for Nabia and Pada are presented. Which nation can produce a unit of corn cheaper?. Answers:Pada at 3 units of wheat. Nabia 4 units of wheat. Pada at 1/3 unit of wheat. Nada at 4 unit of of wheat. Both are the same.arrow_forwardes On average, households in China save 40 percent of their annual income each year, whereas households in the United States save less than 5 percent. Production possibilities are growing at roughly 9 percent annually in China and 3.5 percent in the United States. Use graphical analysis of "present goods" versus "future goods" to explain the differences in growth rates. Goods for the future (Capital) PPC3 100 90- 80 70 60- 50- 40- 30- 20- 10 0 0 Production Possibilities (United States) PPC₂ PPC₁ B 10 20 30 40 50 A 60 70 Goods for the present 80 90 100 Future Goods 100 90- 80- 70 60- 50+ 40 30- 20- 10- 0 PPC3 PPC₂ PPC₁ B 0 10 20 Instructions: Refer to the diagram on the left. Which point best represents the combination of present and future goods in the U.S.? (Click to select) Which dashed production possibilities curve best represents future growth in the U.S.?(Click to select) Instructions: Refer to the diagram on the right. Which point best represents the combination of present and…arrow_forward
- (Shape of the PPF) Suppose a production possibilitiesfrontier includes the following combinations:Cars Washing Machines0 1,000100 600200 0a. Graph the PPF, assuming that it has no curvedsegments.b. What is the cost of producing an additional car when50 cars are being produced?arrow_forwardYou have a field on which you can grow two types of crops, barley and wheat. The field has 30 acres and each acre can produce 2 wheat or 3 barley. Suppose you are producing 60 barley and it is economically efficient for you to do so. How much wheat are you producing? 5 wheat 10 wheat 15 wheat 20 wheatarrow_forwardConsider the following production possibilities curve (PPC) for an economy that produces two goods- cotton and bananas, both measured in tonnes produced per year. (0, 1500) A (100, 1440) B Tonnes of Cotton 1500 1000 500 0 100 100 tonnes of cotton 360 tonnes of cotton 300 tonnes of cotton. (200, 1280) 920 tonnes of cotton. 200 Tonnes of Bananas (300, 920) 300 Suppose the economy is currently producing at Point C. What is the opportunity cost of increasing production of bananas to 300 tonnes at Point D? E (360, 500) F (400,0) 400arrow_forward
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