a. For each type of worker, calculate their opportunity cost of producing a bookshelf (in terms of backpacks): Artist: backpacks Engineer: backpacks b. Suppose there are 100 of each type of worker in Sherwood (so 200 workers total), and each worker can work 8 hours a day. The graph below plots the daily combined production possibilities frontier (PPF) for this economy. What is the x-intercept of this PPF? What is the y-intercept of this PPF? What are the coordinates of point A? ( bookshelves, backpacks) What is the slope of segment 1? c. Suppose Sherwood has an opportunity to trade some of the bookshelves they produce with a neighboring town in return for backpacks, and the other town offers a price of 0.5 backpacks per bookshelf. Assuming the residents of Sherwood would rather consume backpacks than bookshelves, should they engage in trade with the neighboring town? Briefly explain why or why not:
Assume the town of Sherwood consists of 2 types of workers: artists and engineers. The table below depicts the number of bookshelves and backpacks each type of worker can produce in an hour.
|
|
Bookshelves |
Backpacks |
|
Artists |
2 |
5 |
|
Engineers |
3 |
3 |
a. For each type of worker, calculate their
Artist: backpacks
Engineer: backpacks
b. Suppose there are 100 of each type of worker in Sherwood (so 200 workers total), and each worker can work 8 hours a day. The graph below plots the daily combined production possibilities frontier (
What is the x-intercept of this PPF?
What is the y-intercept of this PPF?
What are the coordinates of point A? ( bookshelves, backpacks)
What is the slope of segment 1?
c. Suppose Sherwood has an opportunity to trade some of the bookshelves they produce with a neighboring town in return for backpacks, and the other town offers a price of 0.5 backpacks per bookshelf. Assuming the residents of Sherwood would rather consume backpacks than bookshelves, should they engage in trade with the neighboring town?
Briefly explain why or why not:
Opportunity cost(OC) of a product is the amount of another product that is forgone to produce the product. The producer who has a lower OC of a certain good than another producer has a comparative advantage(CA) in that good.
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