Q1: The following schedule shows the combination of the total production of Aerospace production (Rockets) and agricultural production (Rice) in a specific country, assuming full use of economic resources: PossibilityRockets Production (X Axis)Rice Production (Y Axis)A140B123C96D59E012 Answer the following questions:Using the table above draw the production possibilities frontier (Make sure to highlight the points on the PPF)Can the country produce 9 rockets and 9 tons of rice? (Explain)Can the country produce 6 rockets and 6 tons of rice? (Explain)Which points on the graph are attainable and efficient? (Why)What is the opportunity cost of moving from point B to C? (the opportunity cost of …………………… is …………………)If the country had a loan from the world-bank and directed the loan to increase the agricultural production, show graphically how the PPF will change? Q2: What is the effect on the equilibrium price of hotdogs and the equilibrium quantity of hotdogs sold if The price of a hamburger rises. A substitute good DemandThe price of a hotdog bun rises. A complement good DemandThe supply of hotdog sausages increases. SupplyConsumers’ incomes increase if hot dogs are a normal good? DemandThe wage rate of a hotdog seller increases. SupplyIf the wage rate of the hotdog seller rises and at the same time prices of ketchup, mustard, and relish fall? Supply (factors of production) and complement in production Sub comD + - S - + Q3: Answer the following questions with the help of the table that shows the demand and supply for potato chips:What are the equilibrium price and equilibrium quantity of potato chips?If chips were 60 cents a bag, describe the situation in the market for potato chips and explain what would happen to the price of a bag of chips. suppose a new snack food comes onto the market and as a result the demand for potato chips decreases by 40 million bags per week. Has there been a shift in or a movement along the supply curve of chips?Has there been a shift in or a movement along the demand curve for chips?What is the new equilibrium price and quantity of chips? suppose that a flood destroys several potato farms and as a result supply decreases by 20 million bags a week at the same time as the new snack food comes onto the market. What is the new equilibrium price and quantity of chips? Price (cents per bag)Quantity demanded (millions of bags a week)Quantity supplied (millions of bags a week)40170905016010060150110701401208013013090120140100110150110100160

Production Possibility Frontier : A Production Possibility curve may be defined as a curve which…

Answered: 1: The following schedule shows the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q1: The following schedule shows the combination of the total production of Aerospace production (Rockets) and agricultural production (Rice) in a specific country, assuming full use of economic resources:

Possibility	Rockets Production (X Axis)	Rice Production (Y Axis)
A	14	0
B	12	3
C	9	6
D	5	9
E	0	12

Answer the following questions:

Using the table above draw the production possibilities frontier (Make sure to highlight the points on the PPF)
Can the country produce 9 rockets and 9 tons of rice? (Explain)
Can the country produce 6 rockets and 6 tons of rice? (Explain)
Which points on the graph are attainable and efficient? (Why)
What is the opportunity cost of moving from point B to C? (the opportunity cost of …………………… is …………………)
If the country had a loan from the world-bank and directed the loan to increase the agricultural production, show graphically how the PPF will change?

Q2:

What is the effect on the equilibrium price of hotdogs and the equilibrium quantity of hotdogs sold if

The price of a hamburger rises. A substitute good Demand
The price of a hotdog bun rises. A complement good Demand
The supply of hotdog sausages increases. Supply
Consumers’ incomes increase if hot dogs are a normal good? Demand
The wage rate of a hotdog seller increases. Supply
If the wage rate of the hotdog seller rises and at the same time prices of ketchup, mustard, and relish fall? Supply (factors of production) and complement in production

Sub com

D + -

S - +

Q3:

Answer the following questions with the help of the table that shows the demand and supply for potato chips:

What are the equilibrium price and equilibrium quantity of potato chips?
If chips were 60 cents a bag, describe the situation in the market for potato chips and explain what would happen to the price of a bag of chips.

suppose a new snack food comes onto the market and as a result the demand for potato chips decreases by 40 million bags per week.

Has there been a shift in or a movement along the supply curve of chips?
Has there been a shift in or a movement along the demand curve for chips?
What is the new equilibrium price and quantity of chips?

suppose that a flood destroys several potato farms and as a result supply decreases by 20 million bags a week at the same time as the new snack food comes onto the market.

What is the new equilibrium price and quantity of chips?

Price (cents per bag)	Quantity demanded (millions of bags a week)	Quantity supplied (millions of bags a week)
40	170	90
50	160	100
60	150	110
70	140	120
80	130	130
90	120	140
100	110	150
110	100	160

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