A bowed-out production possibility frontier for an economy that produces only meat and potatoes shows that the __________ of potatoes in terms of meat increases as more potatoes are produced and that the opportunity cost of meat in terms of potatoes__________ as more potatoes are produced. A. inherent cost; increases B. opportunity cost; decreases C. opportunity cost; increases

A bowed-out production possibility frontier for an economy that produces only meat and potatoes shows that the of potatoes in terms of meat increases as more potatoes are produced and that the opportunity cost of meat in terms of potatoes as more potatoes are produced. A. inherent cost; increases B. opportunity cost; decreases C. opportunity cost; increases

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.

Question

A bowed-out production possibility frontier for an
economy that produces only meat and potatoes shows
that the ______ of potatoes in terms of meat increases as
more potatoes are produced and that the opportunity
cost of meat in terms of potatoes
as more
potatoes are produced.
A. inherent cost; increases
B. opportunity cost; decreases
C. opportunity cost; increases
D. inherent cost; decreases

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Problem 1: Production Possibilities Frontier Consider an economy that produces bicycles and autos. The production possibilities schedule shown below denotes the points on the production possibilities frontier. Points Amount Bicycles Amount Autos A 10 B 8 D E 5 8 12 14 15 a) Draw the production possibilities frontier in a clearly labelled graph. You can assume the points on the frontier are connected by straight lines. Please put bicycles on the x-axis and autos on the y-axis. b) Is point E more efficient in production than point C? Explain. c) Based on this production possibility frontier, can the economy currently produce 8 bicycles and 10 autos? If not, explain what would need to happen to allow the economy to produce 8 bicycles and 10 autos. d) True/False/Uncertain (and explain): Point B more efficient in allocation than point A. e) Does this production frontier have increasing opportunity costs? Explain, and also explain why it is common for production frontiers to have increasing…
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