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In an economy, only one combination of goods is productive efficient. True or false?
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- Consider the problem of an individual that has Y dollars to spend on consuming over two periods. Let c, denote the amount of consumption that the individual would like to purchase in period 1 and c2 denote the amount of consumption that the individual would like to consume in period 2. The individual begins period 1 with Y dollars and can purchase c1 units of the consumption good at a price P and can save any unspent wealth. Use sı to denote the amount of savings the individual chooses to hold at the end of period 1. Any wealth that is saved earns interest at rate r so that the amount of wealth the individual has at his/her disposal to purchase consumption goods in period 2 is (1+r)s1. This principal and interest on savings is used to finance period 2 consumption. Again, for simplicity, we can assume that it costs P2 dollars to buy a unit of the consumption good in period 2. 2 The individual's total happiness is measured by the sum of period utility across time, u(cı) + u(c2). Let u(c)…a) Explain exchange efficiency and production efficiency and give the main condition for each type of these efficiencies.b) Do you think Pareto Efficiency is enough to explain Pareto Efficiency? If yes, why, if not, why not? Discuss.Use the following figure to answer the question below. Corn 80 Production Possibilities Frontier A Point A in the figure above is B 00 80 Green Beans
- What is the Samuelson Rule? Why does the market outcome, based on the actions of rational, self-interested individuals will deviate from the results of the Samuelson RuleA fast-food company spends millions of dollars to develop and promote a new hamburger on its menu only to find that consumers won't buy it because they don't like the taste. From an economic perspective, the company should keep the hamburger on the menu because they've spent so much money and time developing and promoting the product. spend more money to develop a more efficient way to cook the hamburger so it cooks in a shorter time. pull the hamburger off the menu and treat the development and promotion expenditures as a sunk cost. keep trying to sell the hamburger so that people who developed and promote it have a job with the company.In the capitalist economic system, the individuals through the forces of demand and supply interact to determine the allocation of resources as well as prices without external interference. Why then is the government sometimes justified to intervene in the economy to allocate resources?
- 1)Which of the following is consistent with a point below an economy's production possibilities frontier (PPF)? a)The economy is operating efficiently. b)The production of one good can only be increased if the production of another good is reduced. c)None of the above. d)There are unemployed resources.QUESTION 7 Olivia and Susan operate a store that sells burritos. There are two main activities: chopping up the ingredients and then cooking the fillings for the burritos. Olivia and Susan are deciding who should chop the ingredients and who should cook the fillings in order to maximise output. Olivia Susan Chopped Food (kg/hr) 15 20 Cooked Food (kg/hr) 20 30 Which of the following statements are true: For Olivia, the opportunity cost of 1kg of cooked food is 1.33kgs (to 2 decimal places) of choppectood. For Susan, the opportunity cost of 1kg of cooked food is 0.67kgs (to 2 decimal places) of chopped food. Susan should specialise in chopping. Olivia has an absolute advantage in chopping.Supermarché Jean Claude has decided to manufacture its own brand of non-alcoholic beverages, called NAB, and chocolate bars, called S-JC. A certain amount of money has been allocated to the production of these two products. Jean Claude believes in the old saying that a picture is worth a thousand words, and once again, he has called on you. This time, he wants to see diagrams that illustrate the effects of each of the following events on the production possibilities for NABS and S-JCs so he can visualize the situation. (a) A new and more efficient method of producing non-alcoholic beverages is discovered. (b) The demand for both non-alcoholic beverages and chocolate bars increases. (c) More workers are hired to produce S-JCs. (d) Resources are transferred from S-JC production to NAB production. (e) All workers are trained so that the quality of their labour services improves. Instructions Produce the series of graphs with accompanying texts (150-175 words) so that Uncle Jean Claude…
- ECONOMICS QUESTIONS 1d. Suppose your roommates notice that every time they leave a mess in the kitchen, you clean it up for them. How might this incentivize them to behave? What is this example an illustration of? 1e) Consider a newly discovered forest that has no regulations about what can be done with its trees. Can people be prevented from going into the forest and cutting down trees? Explain. 1f) Are the trees rival in consumption? What type of good are the trees? What would you predict to happen to this forest over time and why? What is one policy that might prevent your prediction from happening?Which of the following is the best example of a search good? A) A haircut B) A meal at a restaurant C) A softball D) Psychotherapy
