Once again, consider Vil and Malleus, who initially do not trade.They can produce wine, meat, or some combination of the twousing only 50 hours of labor each per week. Vil can produce500 units of wine if he produces no meat; he can produce 2000units of meat if he produces no wine. Malleus can produce 400units of wine if he produces no meat; he can produce 1200units of meat if he produces no wine.Their opportunity costs are constant, so their PPFs are straightdownward-sloping lines.In autarky, Vil used half (50%) of his time to produce meat andthe rest on wine, while Malleus spent 7/10 (70%) of his time onmeat production and the rest of his time on wine production.However, now the two have decided to trade with each other.They decide that each producer will fully specialize in the goodwhere he has comparative advantage. Later, they will work outthe details on how much meat will trade for wine and vice versa. One last time, consider the case of Vil and Malleus from theprevious questions.When Malleus starts to trade with Vil, his PPFshifts leftwardand he can now efficientlyconsume at points inside (under) or on the PPF

PPF: Graphical representation of the combination of two goods that can be produced in the economy in…

One last time, consider the case of Vil and Malleus from th previous questions. When Malleus starts to trade with Vil, his PPF shifts leftward and he can now efficiently consume at points inside (under) or on the PPF

One last time, consider the case of Vil and Malleus from th previous questions. When Malleus starts to trade with Vil, his PPF shifts leftward and he can now efficiently consume at points inside (under) or on the PPF

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Paul's PPF Sue's PPF Cheese Cheese 100 80 60 Ham 30 Ham Based on the graph above, which of the following statements is true? The Principle of Absolute Advantage does not help us determine how trade would benefit Paul and Sue. O Sue would lose out by trading with Paul, because she is less competitive than Paul in the production of both goods. O Paul has nothing to gain from trading with Sue, since he is better in making both goods. Sue has an absolute advantage in the production of cheese.
The budget constraint model and the production possibilities frontier (PPF) model both illustrate (select ALL that apply): O allocative efficiency O productive effieciency O a curved line to represent both the budget constraint and the PPF the tradeoffs in choosing more of one good at the cost of less of the other O comparative advantage O constraints on what we can have due to scarce resources
Suppose an economyuses two resorces (labor and capital) to produce two goods (wheat and cloth). Captial is relativley more useful in prducing cloth, and labor ir relativley more useful in prducing wheat. If the supply of cpatial falls by 10% and the suppy of labor increases by 10%, how will the PPF for wheat and cloth change?
4. a. Suppose that you are on a deserted island and can produce either 32 tons of coconuts OR 16 tons of pineapples. Draw the PPF representing this situation. Assume that coconuts are on the x-axis. Also assume that the PPF is linear. Clearly label your graph. b. For each of the following combinations say whether they are attainable (feasible) or unattainable (infeasible), based on the above information. If they are feasible, say whether they are efficient or inefficient. Also, label the three points on the graph above. (i) 8 tons of coconuts and 12 tons of pineapples: (ii) 16 tons of coconuts and 3 tons of pineapples:
Mitchell and Scott can produce either apples or oranges. The table lists the maximum number of each that they can produce per day. Apples Oranges Mitchell 6 30 Scott 12 24 Which of the following combinations of goods is it possible for Mitchell and Scott to consume if they can trade apples and oranges on the world market at a price of $6/kg for apples and $1/kg for oranges? 15kg of apples and 18kg of oranges 15kg of apples and 20kg of oranges 10kg of apples and 50kg of oranges Okg of apples and 108kg of oranges
Autos PPF Lumber E SCO 4. Refer to the figure above. Which point or points would society definitely prefer to point A?
Use the following Production Possibilities Graph to explain the concepts of scarcity, choice, and opportunity cost and how they relate to decision making. Be sure to specify how the PPF graph inllustrates each concept and include numerical values. Butter | 3 25 == 05 15 10 == 1.5 0.0 1.6 Guns 0 2 3 4 Butter 20 12 ● 20 18 16 14 12 4 2 0 Guns (Protective Goods) vs Butter (Consumer Goods) (In billions of metric tons) 1 2 Guns 3
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its trading partner. Then the country will specialize in the production of this good and trade it for other goods. The following graphs show the production possibilities frontiers (PPFS) for Freedonia and Desonia. Both countries produce grain and tea, each initially (i.e., before specialization and trade) producing 6 million pounds of grain and 3 million pounds of tea, as indicated by the grey stars marked with the letter A. TEA (Millions of pounds) tea. 16 14 12 10 8 6 2 0 0 PPF 2 Freedonia Þ 4 6 8 10 12 GRAIN (Millions of pounds) 14 16 ? TEA (Millions of pounds) 16 14 Note: Dashed drop lines will automatically extend to both axes. 12 10 6 2 0 0 PPF I 2 Desonia 4 6 8 10 12 GRAIN (Millions of pounds) 7 Freedonia has a comparative advantage in the production of while Desonia has a comparative advantage in the production of ▼. Suppose that…
Problem 2 Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have ten hours of time available. The can use their time to do one of two things: make pancakes or make hamburgers. Bob can make two hamburgers in an hour or one pancake in an hour. Jake can make three pancakes in an hour or two hamburgers in an hour. Use this information to answer the following questions: a.) Draw Jake and Bob's PPFS, with hamburgers on the x-axis. b.) Give equations for Jake and Bob's PPFS in y = mx+b form, still treating hamburgers as the x variable. c.) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pancakes? d.) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? e.) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hambruger? Why or why not?
Use the PPF to answer the following questions: (a) At point F, how many sweaters are being produced? How many hard drives? (b) Label points A-H as either efficient, inefficient, or unattainable. (c) Can we determine if point F is productively efficient? If so, is it productively efficient? (d) Can we determine if point F is allocatively efficient? If so, is it allocatively efficient?
Note: Dashed drop lines will automatically extend to both axes. OFFEE (Millions of pounds) 32 28 COFFEE (Millions of pounds). 24 20 16 0 32 28 24 20 16 0 PPF 4 12 PPF 0 The following graph shows the same PPF for Sylvania as before, as well as its initial consumption at point A. As you did for Candonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. (?) 4 O True 8 O False Candonia 4 12 20 16 GRAIN (Millions of pounds) 24 Sylvania 12 20 16 GRAIN (Millions of pounds) 28 24 32 28 Consumption After Trade 32 (? + Consumption After Trade True or False: Without engaging in international trade, Candonia and Sylvania would have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)
Suppose an economy uses two resouces (labor and capital) to produce two goods (wheat and cloth). Capital is relatively more useful in producing cloth, and labor is relatively more useful in producing wheat. If the supply of capital falls by 10 persent and the supply of labor increases by 10 percent, how will the PPF for wheat and cloth change?