5. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter". a) Draw a production possibilities frontier for guns and butter. b) Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. c) Show a point on the graph that is impossible for the economy to achieve. Show a point on the graph that is feasible but inefficient. d) Imagine that the society has two political parties, the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point that the Doves might choose. e) Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.
5. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and "butter". a) Draw a production possibilities frontier for guns and butter. b) Using the concept of opportunity cost, explain why it most likely has a bowed-out shape. c) Show a point on the graph that is impossible for the economy to achieve. Show a point on the graph that is feasible but inefficient. d) Imagine that the society has two political parties, the Hawks (who want a strong military) and the Doves (who want a smaller military). Show a point on your production possibilities frontier that the Hawks might choose and a point that the Doves might choose. e) Imagine that an aggressive neighboring country reduces the size of its military. As a result, both the Hawks and the Doves reduce their desired production of guns by the same amount. Which party would get the bigger "peace dividend," measured by the increase in butter production? Explain.
Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 5SQ
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Transcribed Image Text:5. Imagine a society that produces military goods and consumer goods, which we'll call "guns" and
"butter".
a) Draw a production possibilities frontier for guns and butter.
b) Using the concept of opportunity cost, explain why it most likely has a bowed-out shape.
c) Show a point on the graph that is impossible for the economy to achieve. Show a point on the
graph that is feasible but inefficient.
d) Imagine that the society has two political parties, the Hawks (who want a strong military) and
the Doves (who want a smaller military). Show a point on your production possibilities frontier
that the Hawks might choose and a point that the Doves might choose.
e) Imagine that an aggressive neighboring country reduces the size of its military. As a result, both
the Hawks and the Doves reduce their desired production of guns by the same amount. Which party
would get the bigger "peace dividend," measured by the increase in butter production? Explain.
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