Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 2, Problem 6SQP
(a)
To determine
The
(b)
To determine
The inefficiency point.
(c)
To determine
The law of increasing
(d)
To determine
Shift in the production possibility curve.
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The following is a set of hypothetical production possibilities for a nation.
Combination
Automobiles (thousands)
Beef (thousands of tons)
A
0
10
B
2
9
C
4
7
D
6
4
E
8
0
Plot these production possibilities data. What is the opportunity cost of the first 2,000 automobiles produced? Between which points is the opportunity cost per thousand automobiles highest? Between which points is the opportunity cost per thousand tons of beef highest?
Label a point F inside the curve. Why is this an inefficient point? Label a point G outside the curve. Why is this point unattainable? Why are points A through E all efficient points?
Does this production possibilities curve reflect the law of increasing opportunity costs? Explain.
What assumptions could be changed to shift the production possibilities curve?
Use the data below to answer the following questions.
Combination
Tomatoes (kg)
Chilies (kg)
A
70
0
B
66
2
C
60
4
D
52
6
E
42
8
F
30
10
G
16
12
H
0
14
Draw a production possibilities curve by putting tomatoes on the vertical axis and chilies on the horizontal axis.
Calculate opportunity cost if we move from:
A to B = _________________
C to E = _________________
E to D = _________________
H to G = _________________
Suppose two nations, Beta and Gamma, each make aircraft and corn. The main resource in each nation is hours of "labor". Production occurs in each nation according to the following table. With one hour, a worker in each nation can produce the following:
Table showing Aircraft and Corn produced per hour
Aircraft
Corn
Beta
1 per hour
500 per hour
Gamma
2 per hour
300 per hour
What is the opportunity cost of each good (in terms of the other good) for each nation? Try creating a small table of the opportunity costs such as this:
Beta: 1 aircraft = _______ corn 1 corn = _______ aircraft
Gamma: 1 aircraft = _______ corn 1 corn = _______ aircraft
Which nation has the Absolute Advantage in aircraft? Which nation has the Absolute Advantage in corn?
Which nation has the Comparative Advantage in aircraft? Which nation has the Comparative Advantage in corn?
If these two nations trade, what good should each specialize in and export to the other?
What…
Chapter 2 Solutions
Economics For Today
Ch. 2.6 - Prob. 1YTECh. 2.7 - Prob. 1GECh. 2 - Prob. 1SQPCh. 2 - Prob. 2SQPCh. 2 - Prob. 3SQPCh. 2 - Prob. 4SQPCh. 2 - Prob. 5SQPCh. 2 - Prob. 6SQPCh. 2 - Prob. 7SQPCh. 2 - Prob. 8SQP
Ch. 2 - Prob. 9SQPCh. 2 - Prob. 10SQPCh. 2 - Prob. 11SQPCh. 2 - Prob. 12SQPCh. 2 - Prob. 1SQCh. 2 - Prob. 2SQCh. 2 - Prob. 3SQCh. 2 - Prob. 4SQCh. 2 - Prob. 5SQCh. 2 - Prob. 6SQCh. 2 - Prob. 7SQCh. 2 - Prob. 8SQCh. 2 - Prob. 9SQCh. 2 - Prob. 10SQCh. 2 - Prob. 11SQCh. 2 - Prob. 12SQCh. 2 - Prob. 13SQCh. 2 - Prob. 14SQCh. 2 - Prob. 15SQCh. 2 - Prob. 16SQCh. 2 - Prob. 17SQCh. 2 - Prob. 18SQCh. 2 - Prob. 19SQCh. 2 - Prob. 20SQ
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- A country, Frankland, produces only two products, cars and trucks. Currently, Frankland is producing on the curve, producing an even amount of cars and trucks. Define what a production possibilities curve is and is used for, and explain what happens when a new technology is adopted by the country of Frankland and the nation is able to increase production because of the increased productivity. You must use complete sentence to answer this question.arrow_forwardSuppose that a nation currently is producing combination F in the table below and on the graph of the production possibilities curve to the right. What is the opportunity cost of producing 10.5 million more smartphones and moving to production combination E? Combination A B с D E F G Smartphones (millions per year) 50.0 48.0 45.0 40.0 33.0 22.5 0.0 Tablets (millions per year) 0 10 20 30 40 50 60 The opportunity cost of producing 10.5 million more smartphones and moving from production combination F to production combination E is million tablet devices per year. (Enter your response as a whole number.) (...) Smartphones (millions per year) 50€ 40- 30- 20- 10- 0 A B 10 C D E F G 20 30 40 50 60 Tablet Devices (millions per year) Qarrow_forwardIn the picture below is the table to the question. The highlighted one is my guess which is wrong. Based on the production table above, what is the opportunity cost of 1 unit of fried in France? A)2 units of fries(this one is wrong) B) 1/3 of a burger C)3 units of fries D) 1/2 a burgerarrow_forward
- Consider the following production possibilities table that shows different combinations of two goods that can be produced with given resources: Shirts Corn A 0 16 B 2 12 C 4 8 D 6 4 E 8 0 When the country moves from point A to point B, the opportunity cost of producing 1 shirt is bushels of corn. When the country moves from point C to point D, the opportunity cost of producing 1 shirt is bushels of corn.arrow_forwardWhat does a point inside the production possibilities frontier (PPF) represent? A. An efficient allocation of resources B. An underutilization of resources C. A technologically advanced production point D. An unattainable production level given current resourcesarrow_forward1. Use the graph below to answer the following questions. a) If Alison is currently growing 80 bunches of kale per period, how many radish bunches is she growing? Assume that resources are fully utilized. b) What is the opportunity cost of one bunch of radishes? c) What is the opportunity cost of one bunch of kale? d) If Alison is currently producing 30 bunches of radishes, what is the opportunity cost of producing another 20 bunches of radishes? e) Is it possible for Alison to produce 120 bunches of kale and 30 bunches of radishes? f) If Alison is producing 60 bunches of radishes and 30 bunches of kale, is she fully utilizing her resources? g) Is the opportunity cost of this PPF constant? Kale (bunches) 180 160 140 120 100 20 40 60 Radishes (bunches) "L'PL 80 100arrow_forward
- Let Utopia be a very small country that produces Cheese and Bread only. Its production possibilities frontier is provided in the table above. Suppose that Utopia is currently producing at point B. What is the opportunity cost of 2 additional kg of cheese at point B ? At point C? What do these results show?arrow_forwardExplain the following two statements: “Education increases human capital and expands production possibilities”, and “The opportunity cost of a university degree is forgone consumption”.arrow_forwardSuppose the economy initially produces 12 million gallons of drinking water and 500 million tons of coal, which is represented by point A. The opportunity cost of producing an additional 4 million gallons of drinking water (that is, moving production to point B) is tons of coal. Suppose, instead, that the economy currently produces 420 million tons of coal and 16 million gallons of drinking water, which is represented by point B. Now the opportunity cost of producing an additional 4 million gallons of drinking water (that is, moving to point C) is tons of coal. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 4 million additional gallons of drinking water at point B is the opportunity cost of 4 million additional gallons of drinking water at point A. This reflects thearrow_forward
- Why is the Production Possibility Curve (PPC) or Production Possibility Frontier (PPF) concave? What does increasing opportunity costs mean? When we increase production, why does it seem that we have to sacrifice more and more resources?arrow_forwardThe United States is one of the world's wealthiest countries. Think of a recent case in which the decisions of the U.S. government were severely constrained by scarcity. Describe the trade-offs that were involved. What were the opportunity costs of the decisions that were actually made?arrow_forwardUsing the diagram below, which of the following would not entail an opportunity cost? (more than one option may be possible). Multiple answers: Multiple answers are accepted for this question Select one or more answers and submit. For keyboard navigation... SHOW MORE ✓a A movement from A to B. b A movement from A to C. c A movement from C to B. d A movement from B to C. e A movement from C to A.arrow_forward
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