2. Below is a production possibilities table for automobiles and forklifts: Type of Production Automobiles Forklifts Pro 0 2 30 27 4 21 6 12 8 0 (a) Graph the production possibilities frontier for this economy (with Automobiles on the horizontal axis and forklifts on the vertical axis). Is production at a point outside the production possibilities curve currently possible? (b) If the economy characterized by the production possibilities above were producing 3 automobiles and 20 forklifts, what could you conclude about its use of available resources? (c) Is the opportunity cost (in terms of Forklifts) of producing additional units of Automobiles increasing, decreasing, or constant? Explain. (c) Explain how (if at all) each of the following affects production possibilities frontier: i. The quality of education increases. ii. The number of unemployed workers increases. iii. A new technique improves the efficiency of extracting copper from ore (a major input in production of automobiles and forklifts). iv. A devastating earthquake destroys numerous production facilities.

2. Below is a production possibilities table for automobiles and forklifts: Type of Production Automobiles Forklifts Pro 0 2 30 27 4 21 6 12 8 0 (a) Graph the production possibilities frontier for this economy (with Automobiles on the horizontal axis and forklifts on the vertical axis). Is production at a point outside the production possibilities curve currently possible? (b) If the economy characterized by the production possibilities above were producing 3 automobiles and 20 forklifts, what could you conclude about its use of available resources? (c) Is the opportunity cost (in terms of Forklifts) of producing additional units of Automobiles increasing, decreasing, or constant? Explain. (c) Explain how (if at all) each of the following affects production possibilities frontier: i. The quality of education increases. ii. The number of unemployed workers increases. iii. A new technique improves the efficiency of extracting copper from ore (a major input in production of automobiles and forklifts). iv. A devastating earthquake destroys numerous production facilities.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 3CQQ

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Similar questions

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Below is the production possibilities table for consumer goods (maize) and capital goods (tractors):Type of productionProduction possibilities A B C D Emaize 30 27 21 12 0Tractors 0 2 4 6 8i. Show these data graphically. ii. If the economy is at point C, what is the cost of one more unit of maize? iii. Suppose improvement occurs in the technology of producing tractors but not in the technology of producing maize. Draw the new production possibilities curve. iv. Now assume that a technological advance occurs in producing maize but not in producing tractors. Draw the new production possibilities curve. v. Now draw a production possibilities curve that reflects technological improvement in the production of both goods.
Figure 1 The production possibility frontier ABCDE is a production possibility frontier. It shows the different combinations of goods which can be produced if all resources are fully and efficiently utilised. The economy can produce at any point on the line. It cannot produce at G because the PPF shows the maximum that can be produced. It can produce within the PPF,05 such as at F, but less will be produced than the maximum possible. Non-manufactured goods 50 40 30 20 10 0 A 10 B Ti C 20 30 Manufactured goods G D E 40
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An economy produces two goods ,X and Y .lt uses two means of production, labour and capital. A unit of labour can produce either 1unit of X or 4units of Y (or linear combination of the two).A unit of capital can produce either 4units of X or 1unit of Y (or linear combination of the two)there are 100units of each means of production. (i) Draw the production possibility frontier of the economy when the two goods can only be produced by a mixture of both factors. (ii)What will be the opportunity cost of X if the economy produces 50units of X ? (iii) Given that the production technology is linear ,will the opportunity cost of X remain unchanged when we produce 90units of X ? (iv)Briefly explain the difference between the PPC with a constant opportunity cost and the PPC with an increasing opportunity cost as more output of one good is produced. Use a well labeled diagram to explain your answer?
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19,20
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