2-4. The land of Oz produces dreams (denoted by x) and wishes (denoted by y). The production possibilities function in the current year is given by: y = 2L2+3K²-0.4x² where K is units of capital, and L is units of labor. Assume the current stock of resources is L= 20 and K = 10. The marginal cost of x is given by the slope of the production possibilities frontier, PPF, at a given point and is a function of x. Notice the slope of this nonlinear function is not constant. In this case, the slope, i'.y/i'.x, equals -0.8x (or, the first derivative dy/dx equals - 0.8x.) a. Draw Oz's PPF and state whether resources are perfectly substitutable or not. Explain your answer.

2-4. The land of Oz produces dreams (denoted by x) and wishes (denoted by y). The production possibilities function in the current year is given by: y = 2L2+3K²-0.4x² where K is units of capital, and L is units of labor. Assume the current stock of resources is L= 20 and K = 10. The marginal cost of x is given by the slope of the production possibilities frontier, PPF, at a given point and is a function of x. Notice the slope of this nonlinear function is not constant. In this case, the slope, i'.y/i'.x, equals -0.8x (or, the first derivative dy/dx equals - 0.8x.) a. Draw Oz's PPF and state whether resources are perfectly substitutable or not. Explain your answer.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 30
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Q6
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