2. Production Possibilities Frontier A) Define (in your own words, please do not use the book, or other online resources) and give a strong, unique, example for the following terms. Answers will be checked for originality. Allocative vs Productive efficiency: comparative vs. absolute advantage: invisible hand: marginal analysis: opportunity cost: positive & normative statements: production possibilities frontier: productive efficiency:

2. Production Possibilities Frontier A) Define (in your own words, please do not use the book, or other online resources) and give a strong, unique, example for the following terms. Answers will be checked for originality. Allocative vs Productive efficiency: comparative vs. absolute advantage: invisible hand: marginal analysis: opportunity cost: positive & normative statements: production possibilities frontier: productive efficiency:

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter2: Thinking Like An Economist

Section: Chapter Questions

Problem 6QR

See similar textbooks

Similar questions

What is comparative advantage?
What is absolute advantage? What is comparative advantage?
Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they want to gain from trading with Venezuela? Note: We can think of this ask as the relative price or trade price of lumber. Is the Canadian ask you identified in (b) also beneficial for Venezuelans? Use the production possibilities frontier graph for Venezuela to show that Venezuelans can gain from trade.
Is it possible to have a comparative advantage in the production of a good but not to have an absolute advantage? Explain.
What does a production possibilities frontier illustrate?
Explain why societies cannot make a choice above their production possibilities frontier and should not make a choice below it.
Direction: Plot the Production Possibilities Frontier of the below-data with good X on the horizontal axis and good Y on the vertical axis. GOOD PRODUCTION ALTERNATIVES A B C D E X 0 15 18 21 24 Y 45 42 37 27 0 Question: Explain the different points on the curve. What does each point represent? Why is it important for an economy to be on its production possibilities frontier?
23. Consider an economy producing two goods: cars and milk. The following table gives several points on this economy's production possibility frontier. Cars Milk (gallons/ year) 0 6000 100 4000 200 2000 300 0 a. Graph this economy's production possibility frontier. b. What is the opportunity cost of producing 1 gallon of milk? c. The synthetic production of Bovine Growth Hormone (BGH) allows dairy farmers to get twice as much milk from each cow. In terms of this production possibility frontier, this means that this economy can now produce twice as much milk at each level of car output. What is the opportunity cost of producing 1 gallon of milk?
6
3. Complete the following table and answer the questions below: Toasters Sandwiches Amount Produced in 1 Hour Marginal Opportunity cost of producing 1 toaster Amt. Produced in 1 Hr. Marginal Opportunity cost of producing 1 sandwich Morbius 5 5 25 0.2 Vlad 8 3 24 0.33 a. Who has the absolute advantage in toasters? b. Who has the absolute advantage in sandwiches? c. Who has the comparative advantage in toasters? d. Who has the comparative advantage in sandwiches? e. Who should specialize in producing toasters? f. Who should specialize in producing sandwiches? 4. Vlad offers to give Morbius 1 toaster in exchange for 6 sandwiches. a. Is this a good deal for Vlad? Explain why or why not. b. Is this a good deal for Morbius? Explain why or why not.
6. Given that Nathan has 10 acres and can grow 15 bales of hay or 40 bushels of corn on anacre, while Simon has 10 acres and can grow 20 bales of hay or 35 bushels of corn per acre a. What is the maximum amount of corn and hay that they can jointly produce?b. Does Nathan have a comparative advantage in growing hay?c. Does Simon have an absolute advantage in growing hay?d. What is the opportunity cost to Nathan of one bale of hay?
Table 1: Production Capacity of COVID-FREE LAND.Toilet Rolls 30,000 28,000 24,000 18,000 10,000 0Sanitizers 0 1,000 2,000 3,000 4,000 5,000Use information in Table 1 above to answer the following questions:a. Using the above figures, graph the production possibilities Frontier (PPF) of COVID_FREELAND (Hint! Use Microsoft Excel, for accuracy)b. In your own words, while making use of the graph that you have created in part a, explain what the PPF is. Cleary state all assumptions and properties of the PPF. c. Normally, the people of COVID-FREE LAND demand of 3,000 sanitizers and 18,000 toilet rolls. Suddenly, there is an outbreak of COVID- 19 and the demand for sanitizers and toilet rolls has increased to 4,000 and 20,000, respectively. How would COVID-FREE LAND meet its new demand. Identify and comprehensively discuss at least three possibilities or ways. State all appropriate assumptions made.