Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 2.1, Problem 2ST
To determine
Explain what does the law of increasing cost do with a bowed-outward
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Q1. What is the difference between Straight line PPF and bowed outward PPF?
Q2. Why the Opportunity Cost rises in case of bowed outward PPF?
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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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_forwardBetween a straight line PPF and concave PPF, which one is more realistic? Why? Explain with example and graph.arrow_forwardWhen will be the PPC curve be a straight line?arrow_forward
- Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?arrow_forwardGraphically show the production possibilities frontier for the nation of Stromboli, using the data given in the following table. Does the principle of increasing cost hold in Stromboli? Stromboli’s 2019 Production Possibilities Pizzas per Year Pizza Ovens per Year 75,000,000 0 60,000,000 6,000 45,000,000 11,000 30,000,000 15,000 15,000,000 18,000 0 20,000arrow_forwardQ.20 What will be the shape of PPC when marginal opportunity cost is increasing? (a) Concave to the origin (c) Upward sloping (b) Convex to the origin (d) both (a) and (c) (b)arrow_forward
- Graphically show the production possibilities frontier for the nation of Stomboli, using the data given in the following table. Does the principle of increasing costs hold on Stromboli?arrow_forwardbased on the image and the PPF is point b efficient? why?arrow_forwardWhich of the following statements is incorrect regarding the PPF model? a. A decrease in resource availability would cause the PPF to shift in closer to the origin. b. Points that are currently outside of the PPF could be attainable with increased resource availability and/or improved technology. c. The points on the PPF where the curve touches the axes are clearly the best ones for the firm to produce. d. If the goods sector of an economy is being studied, the axes will be labeled consumer (or consumption) goods and capital goods. e. If an entire economy is being studied, the axes will be labeled goods and services.arrow_forward
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