Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 2, Problem 9QP
To determine
Explain what relationship implies about the cost.
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a) Why is the PPF curve bowed outward. Is it due to increasing opportunity cost or decreasing opportunity cost or constant opportunity cost
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b) What happens to the PPF curve during a recession? Will it shift inward or outward or remains constant
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c) Suppose a technology is banned due to its adverse environmental impacts. Would the production possibilty curve shift inward or outward or remain
constant due to this
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d) How will a policy encouraging more immigration would shift the production possibility forntier. It will shift inward or outward or remain constant
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Q1. What is the difference between Straight line PPF and bowed outward PPF?
Suppose an economy uses two resouces (labor and capital) to produce two goods (wheat and cloth). Capital is relatively more useful in producing cloth, and labor is relatively more useful in producing wheat. If the supply of capital falls by 10 persent and the supply of labor increases by 10 percent, how will the PPF for wheat and cloth change?
Chapter 2 Solutions
Macroeconomics
Ch. 2.1 - Prob. 1STCh. 2.1 - Prob. 2STCh. 2.1 - Prob. 3STCh. 2.1 - Prob. 4STCh. 2 - Prob. 1QPCh. 2 - Prob. 2QPCh. 2 - Prob. 3QPCh. 2 - Prob. 4QPCh. 2 - Prob. 5QPCh. 2 - Prob. 6QP
Ch. 2 - Prob. 7QPCh. 2 - Prob. 8QPCh. 2 - Prob. 9QPCh. 2 - Prob. 10QPCh. 2 - Prob. 11QPCh. 2 - Prob. 12QPCh. 2 - Prob. 13QPCh. 2 - Prob. 1WNGCh. 2 - Prob. 2WNGCh. 2 - Prob. 3WNGCh. 2 - Prob. 4WNGCh. 2 - Prob. 5WNGCh. 2 - Prob. 6WNGCh. 2 - Prob. 7WNGCh. 2 - Prob. 8WNGCh. 2 - Prob. 9WNGCh. 2 - Prob. 10WNGCh. 2 - Prob. 11WNGCh. 2 - Prob. 12WNG
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- Use the data in the following graph to illustrate the law of increasing costs numerically. (Hint: Start at point E and move toward point A.) A 180 C D 150 120 90 60 30 30 60 90 120 150 180 Units of digital cameras Moving from point E toward point A, we give up (Click to select) v players. amounts of digital cameras for each gain of (Click to select) V DVD The opportunity cost of moving from: E to D is (Click to select) v digital cameras; D to C, (Click to select) V digital cameras; C to B, (Click to select) V digital cameras; and B to A, (Click to select) digital cameras. Units of DVD playersarrow_forwardWhy does this PPF have a bowed-out shape? How can the economy increase its production of both tea and snacks? Graph the PPF with and show an increase in its production.arrow_forward( a) why is the slop of PPF downward? (b) why does the PPF look concave to the origin? (c) What is positive economic analysis?arrow_forward
- Assume the economy can produce either sports utility vehicles (SUVS) or minivans. The graph below depicts the current production possibilities frontier (PPF). Suppose several new factories are built. Move the end points of the PPF below to show how the PPF changes. Assume that the factory construction affects the economy's ability to produce both minivans and SUVs. Quantity of minivans Quantity of SUVs PPF This is an example of: economic stagnation. economic recession economic contraction. economic growth.arrow_forwardWhat is meant by produce outside ppf and produce inside ppfarrow_forwardIf an unattainable point outside a production possibilities curve can become an attainable and even an efficient point, can an inefficient point become an efficient point in the production possibilities curve model? Explain with a graph.arrow_forward
- As an economy grows, A) its PPF shifts outward. B) the opportunity cost of production will approach 0. its PPF does not shift; instead, the production point moves from inside the PPF to be closer to the PPF. D) it can eliminate scarcity. E) the opportunity cost of production will increase.arrow_forwardBetween a straight line PPF and a concave PPF, which one is more realistic? Why?Defend your answer.arrow_forwardbased on the image and the PPF is point b efficient? why?arrow_forward
- The accompanying graph contains the production. possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before? 20 more hoses per day Quantity of rubber band balls Incorrect 200 180 160 140 120 100 80 60 40 20 0 0 Rubberland's Production Possibilities 10 20 30 40 50 60 Quantity of rubber hoses PPF 70 80 90 100arrow_forwardConsider farms in Ontario that produce corn or wheat on their land. Small farms have land that is varied in its suitability for growing corn and wheat. Large industrial farms have economies of scale--the more corn (wheat) they produce, the lower their costs. Draw a representative PPF for a small farm and an industrial farm. Explain the shape of your PPFS.arrow_forwardConsider Economia, a nation that produces only clothes and food. On their straight-line PPF, food is measured on the horizontal axis and clothes are measured on the vertical axis. If Economia produces no food, it can produce 1200 units of clothing; if it produces no clothing, it can produce 4800 units of food. Calculate the slope of the nation's PPF. Economia would like to produce one more unit of food. To do so, it must sacrifice how many units of clothing?arrow_forward
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