A nation with fixed quantities of resources is able to produce any of the following combinations of carpet and carpet looms, as shown in the table below and the diagram on the right. Yards of carpet (Millions) 0 12 24 36 48 60 Carpet looms (Thousands) 45 42 36 27 15 0 These figures assume that a certain number of previously produced looms are available in the current period for producing carpet. If this country chooses to produce both carpet and looms, as shown by point C, the number of looms available to produce carpet will increase over time. 1.) Using the 3-point curved line drawing tool, show what will happen to the PPF over time. Label the curve 'PPF₂'. Carpet (millions of yards) 96- 84- 724 60- 48- 36 24- 12- 0- 0 Production Possibility Frontier 8.. 5 10 15 20 25 30 35 40 45 50 55 60 Looms (thousands)

A nation with fixed quantities of resources is able to produce any of the following combinations of carpet and carpet looms, as shown in the table below and the diagram on the right. Yards of carpet (Millions) 0 12 24 36 48 60 Carpet looms (Thousands) 45 42 36 27 15 0 These figures assume that a certain number of previously produced looms are available in the current period for producing carpet. If this country chooses to produce both carpet and looms, as shown by point C, the number of looms available to produce carpet will increase over time. 1.) Using the 3-point curved line drawing tool, show what will happen to the PPF over time. Label the curve 'PPF₂'. Carpet (millions of yards) 96- 84- 724 60- 48- 36 24- 12- 0- 0 Production Possibility Frontier 8.. 5 10 15 20 25 30 35 40 45 50 55 60 Looms (thousands)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Refer to the figure below for question 9. Quantity of Resource Maintenance B Quantity of Current Production 9. The Production Possibilities Frontier can be used to analyze the tradeoff between current production and resource maintenance for the future. Referring to the graph above, which one of the following statements is false? a) Point A depicts the case of high current production and low resource management for the future. b) Point B depicts the case of lower current production than point A and higher resource management for the future. c) Choosing point B will likely lead to an expanded PPF in future years. d) Choosing point A will likely lead to an expanded PPF in future years. e) Choosing point A will likely lead to a reduced PPF in future years.
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Suppose we are considering a HO model setting, where countries have not yet opened up to trade. Two goods are produced exclusively by domestic labor supplies, tires and vehicle frames. Suppose a tire is labor-intensive in production whereas constructing vehicle frames is a capital intensive task that more frequently features automated machinery. Home and foreign maintain the following capital (K) and labor (L) endowments. Factor L K Home 1120 575 Foreign 1680 950 Suppose these countries transition into a free trade scenario. Using the previous details about both countries, perform the following tasks. (i) Sketch a world relative price, CPC line, through your bundle such that it passes through the PPF (it will have no tangency to PPF). (ii) Using this CPC line, with its fixed slope, shift the line until it is perfectly tangent with the indifference curve. Update your sketch with this newly labeled CPC. (iii) Correctly label the equilibria points at which Home consumes and produces. (iv)…
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