Let’s assume the U.S. faces trade-offs between military missiles (MM for Ukraine) and Bridge Repairs (BR in the U.S.). In other words, we are assuming the U.S. can use its scarce, productive resources (land, labor, capital, and entrepreneurship) for the production of military missiles for Ukraine (transfer of resources to Ukraine) or for the repair of bridges in the U.S. (Infrastructure). We are assuming the amount of resources is given, technology is given, and the U.S. is producing using all of its resources which means there are no unemployed resources. MU BR Trade-Off: To produce an additional missile for Ukraine, the opportunity cost is the value of bridge repairs foregone MUs : BRs 0 MUs 140 BRs The U.S. is not producing MUs; so the there is no opportunity cost from producing missiles; there is no trade-off 10 MUs 120 BRs 10 MUs : 20 BRs 10/10 : 20/10 1 : 2 trade-off To produce an additional missile for Ukraine, the opportunity cost is the value of the 2 bridge repairs foregone or given u p. 20 MUs 90 BRs 10 MUs : 30 BRs 10/10 : 30/10 1 : 3 trade-off To produce an additional missile for Ukraine, the opportunity cost is the value of the 3 bridge repairs foregone or given up. 30 MUs 50 BRs 10 MUs : 40 BRs 10/10 : 40/10 1 : 4 trade-off To produce an additional missile for Ukraine, the opportunity cost is the value of the 4 bridge repairs foregone or given up. 40 MUs 0 BRs 10 MUs : 50 BRs 10/10 : 50/10 1 : 5 trade-off To produce an additional missile for Ukraine, the opportunity cost is the value of the 5 bridge repairs foregone or given up. Based upon the completed table above, answer the following NINE questions. This question is very close to the question you were to complete in class on Wednesday September 28. A. How many bridge repairs must the U.S. give up in order to produce its first missile for Ukraine? In other words, if the U.S. transfers resources to produce the first missile for Ukraine, what is the opportunity cost of producing that first missile in terms of the value of bridge repairs that must be foregone?
- Let’s assume the U.S. faces trade-offs between military missiles (MM for Ukraine) and Bridge Repairs (BR in the U.S.). In other words, we are assuming the U.S. can use its scarce, productive resources (land, labor, capital, and entrepreneurship) for the production of military missiles for Ukraine (transfer of resources to Ukraine) or for the repair of bridges in the U.S. (Infrastructure). We are assuming the amount of resources is given, technology is given, and the U.S. is producing using all of its resources which means there are no
unemployed resources.
MU BR Trade-Off: To produce an additional missile
for Ukraine, the
of bridge repairs foregone
MUs : BRs
0 MUs 140 BRs The U.S. is not producing MUs; so the there
is no opportunity cost from producing
missiles; there is no trade-off
10 MUs 120 BRs 10 MUs : 20 BRs
10/10 : 20/10
1 : 2 trade-off
To produce an additional missile for Ukraine,
the opportunity cost is the value of the
2 bridge repairs foregone or given u p.
20 MUs 90 BRs 10 MUs : 30 BRs
10/10 : 30/10
1 : 3 trade-off
To produce an additional missile for Ukraine,
the opportunity cost is the value of the
3 bridge repairs foregone or given up.
30 MUs 50 BRs 10 MUs : 40 BRs
10/10 : 40/10
1 : 4 trade-off
To produce an additional missile for Ukraine,
the opportunity cost is the value of the
4 bridge repairs foregone or given up.
40 MUs 0 BRs 10 MUs : 50 BRs
10/10 : 50/10
1 : 5 trade-off
To produce an additional missile for Ukraine,
the opportunity cost is the value of the
5 bridge repairs foregone or given up.
Based upon the completed table above, answer the following NINE questions. This question is very close to the question you were to complete in class on Wednesday September 28.
A. How many bridge repairs must the U.S. give up in order to produce its first
missile for Ukraine?
- In other words, if the U.S. transfers resources to produce the first missile for Ukraine, what is the opportunity cost of producing that first missile in terms of the value of bridge repairs that must be foregone?
We have to find the opportunity cost of MU in terms of BR. The opportunity cost is progressively increasing.
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