Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 5, Problem 26APA
(a)
To determine
Identify the resource allocation method that is used to allocate highway resource in two different countries.
(b)
To determine
Identify the roles of marginal
(c)
To determine
Identify the roles of marginal social cost, marginal social benefit, producer surplus, and consumer surplus in the allocation of highway resources in Singa.
(d)
To determine
Identify the
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Students have asked these similar questions
7) Fill in the missing information in the following tables. For each table, use the
information provided to identify a possible trade. Then identify the final allocation and a
possible value for the MRS at the efficient solution. (Note: There is more than one correct
answer.) Illustrate your results using Edgeworth Box diagrams.
a. Norman's MRS of food for clothing is 1 and Gina's MRS of food for clothing is
4:
Individual
Norman
Gina
Initial Allocation
6F, 2C
1F, 8C
Individual
Michael
Kelly
Trade
b. Michael's MRS of food for clothing is 1/2 and Kelly's MRS of food for clothing
is 3.
Initial Allocation
10F, 3C
5F, 15C
Final Allocation
Trade
Final Allocation
Graph the PPF
A
B
C
D
E
F
Sanitizer(y)
100
95
85
65
35
0
Rice (x)
0
5
10
15
20
25
Graph the two demand curve and mark Z the point where price is 4 and demand is 20.
Price
0
1
2
3
4
5
Demand (A)
60
50
40
30
20
10
Demand (B)
24
20
16
12
8
4
Graph the demand curve and if the price is 6 please shade the consumer surplus
Price
0
2
4
6
8
10
12
Demand
60
50
40
30
20
10
0
Graph the two supply curve and mark X the point where price is 6 and supply is 6.
Price
0
2
4
6
8
10
Supply (A)
0
3
6
9
12
15
Supply (B)
0
2
4
6
8
10
Graph the supply curve and if the price is 3 and supply is 9 units please shade the consumer surplus
Price
0
1
2
3
4
5
Supply (A)
0
3
6
9
12
15
Graph the demand and supply curve. Mark Z the equilibrium point…
Explain the difference between productive and allocation efficiency. How do you think a centrally planned economy versus a market economy would perform under each measure of efficiency
Chapter 5 Solutions
Macroeconomics
Ch. 5.1 - Prob. 1RQCh. 5.1 - Prob. 2RQCh. 5.1 - Prob. 3RQCh. 5.1 - Prob. 4RQCh. 5.2 - Prob. 1RQCh. 5.2 - Prob. 2RQCh. 5.2 - Prob. 3RQCh. 5.2 - Prob. 4RQCh. 5.2 - Prob. 5RQCh. 5.2 - Prob. 6RQ
Ch. 5.3 - Prob. 1RQCh. 5.3 - Prob. 2RQCh. 5.3 - Prob. 3RQCh. 5.4 - Prob. 1RQCh. 5.4 - Prob. 2RQCh. 5.4 - Prob. 3RQCh. 5.4 - Prob. 4RQCh. 5 - Prob. 1SPACh. 5 - Prob. 2SPACh. 5 - Prob. 3SPACh. 5 - Prob. 4SPACh. 5 - Prob. 5SPACh. 5 - Prob. 6SPACh. 5 - Prob. 7SPACh. 5 - Prob. 8SPACh. 5 - Prob. 9SPACh. 5 - Prob. 10SPACh. 5 - Prob. 11APACh. 5 - Prob. 12APACh. 5 - Prob. 13APACh. 5 - Prob. 14APACh. 5 - Prob. 15APACh. 5 - Prob. 16APACh. 5 - Prob. 17APACh. 5 - Prob. 18APACh. 5 - Prob. 19APACh. 5 - Prob. 20APACh. 5 - Prob. 21APACh. 5 - Prob. 22APACh. 5 - Prob. 23APACh. 5 - Prob. 24APACh. 5 - Prob. 25APACh. 5 - Prob. 26APACh. 5 - Prob. 27APA
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- Question 5 Consider a competitive exchange economy with two individuals (A and B) and two goods (x and y). Consumer A is initially endowed with 4 units of good x and 4 units of good y. Consumer A has the following demands for goods x and y: MA MA and TA YA 2px 2Py Consumer B is initially endowed with 16 units of good x and 1 unit of good y. Consumer B has the following demands for goods x and y: MB MB and ув IB = 2Pz 2py where mд is the market value of consumer A's endowment and mß is the market value of consumer B's endowment. At the resulting competitive equilibrium, what is the price of good x (with the price of good y normalised to 1)?arrow_forwardThe following graph shows the supply curve for a group of students looking to sell used smartphones. Each student has only one used smartphone to sell. Each rectangular segment under the supply curve represents the "cost," or minimum acceptable price, for one student. Assume that anyone who has a cost just equal to the market price is willing to sell his or her used smartphone. 300 250 Kyoko 200 Jacques 3, 125 150 Eleanor 100 AD Damell Beth 50 Andrew QUANTITY (Used smartphones) PRICE (Dolars per used smartphone)arrow_forwardCAl QuestIONIS westion 49 of 55 > (Figure: Market 3) Use the graph to answer the question. Marginal social cost Price $6 $5 $4 3 2 4 $3 $2 $1 0 Completed 47 out of 55 4 8 four; $6 12; $3 eight; $4 three; $12 12 16 20 Supply Demand 24 Quantity O 01 18- FOR SON SEC Save Answer The graph shows the marginal social cost, demand, and supply curves in the toothpaste market. What is the socially optimal quantity and price in this market?arrow_forward
- Exhibit 2-4: Firm X's Points of Production on Its PPF Points A E Capital Goods (K) 50.00 45.00 35.00 20.00 0.00 Consumption Goods ( 0.00 C) 20.00 40.00 60.00 80.00 Refer to Exhibit 2-4. In moving production allocations from points C to E on the Production Possibilities Frontier or Curve (PPF or PPC), the opportunity cost of production at Point E is unit(s) of goods, respectively. O 40.00; consumption goods O 35.00; capital goodsarrow_forwardSuppose Gus has a pineapple that he would get $3 in enjoyment from consuming and suppose Sean has no pineapple and would get $7 in enjoyment from consuming a pineapple. If they moved the pineapple from Gus to Sean what would be the gains from the trade (or surplus) created?arrow_forwardB. Let’s consider the market for flour in a different town. Assume that it is efficient (i.e. that there are not external costs to producing flour, and no external benefits from consuming it). Price ($/lb) Quantity Supplied (thousands of lbs per day) Quantity Demanded (thousands of lbs per day) 1.5 8 14 2 9 13 2.5 10 12 3 11 11 3.5 12 10 4 13 9 What is the price and quantity of flour sold without government intervention. Graph this equilibrium. XXXX 2. Suppose that, alarmed by the inability of many poorer consumers to buy flour, the government institutes a $2/lb price ceiling. How much flour will suppliers wish to sell, and how much will buyers demand? How much flour will actually be sold? Show this outcome on the same graph you drew for question 1. XXXX 3. Describe, in one sentence each, three problems that this policy might create? Please do not simply copy down phrases from the textbook, but instead describe ways that…arrow_forward
- Discuss: “The equilibrium output is an efficient allocation of resources. Hence laissez-faire is the best policy”.arrow_forwardPerson 1 can allocate her 8-hour day between the production of two goods.A and B .Each hour devoted to Good B yields 2 units whereas each hour devoted to Good A produces 4 units Person 2can produce 3 units of Goods B or 4 units of Good A per hour Who have the absolute advantage in the production of Good B Who have the absolute advantage in the production of Goods Aarrow_forwardIn business analysis, the production possibility frontier (PPF) is a curve illustrating the varying amounts of two products that can be produced when both depend on the same finite endowment of resources by one country. The PPF demonstrates that the production of one commodity may increase only if the production of the other commodity decreases in economy. By using the Production Possibilities Frontier Curve (PPF), explain and illustrates (in 1 graph) the concepts of Inefficient allocation of resources Efficient allocation of resources Unattainable point. Scarcity of resources.arrow_forward
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