The graph to the right depicts an economy, Home, which produces flowers and soybeans. Its production possibilities frontier is shown as TT. One of Home's isovalue lines is also shown as VV. Home exists and trades with a second country, Foreign which also produces flowers and soybeans. Assume that Home is maximizing its value of output. 1.) Using the point drawing tool, identify this maximizing point and label it with an X. Also assume that Home consumers maximize their utility. The indifference curve for Home is labeled IC. 2.) Using the point drawing tool, identify the point of consumption by Home consumers. Label this point Z. Carefully follow the instructions above and only draw the required objects. Which of the following statements is true? O A. Home exports 4 units of soybeans. OB. Home imports 4 units of flowers. OC. Home imports 2 units of soybeans. O D. Home exports 4 units of flowers. 26- 24- 22+ 20- 18- 16- 14- 12- 10- 8- 6- 4- 2+ 0+ 0 Trade in the Standard Model (Home) Soybean Production IC VV TT 2 4 6 8 10 12 14 16 18 20 22 24 26 Flower Production Q U

The graph to the right depicts an economy, Home, which produces flowers and soybeans. Its production possibilities frontier is shown as TT. One of Home's isovalue lines is also shown as VV. Home exists and trades with a second country, Foreign which also produces flowers and soybeans. Assume that Home is maximizing its value of output. 1.) Using the point drawing tool, identify this maximizing point and label it with an X. Also assume that Home consumers maximize their utility. The indifference curve for Home is labeled IC. 2.) Using the point drawing tool, identify the point of consumption by Home consumers. Label this point Z. Carefully follow the instructions above and only draw the required objects. Which of the following statements is true? O A. Home exports 4 units of soybeans. OB. Home imports 4 units of flowers. OC. Home imports 2 units of soybeans. O D. Home exports 4 units of flowers. 26- 24- 22+ 20- 18- 16- 14- 12- 10- 8- 6- 4- 2+ 0+ 0 Trade in the Standard Model (Home) Soybean Production IC VV TT 2 4 6 8 10 12 14 16 18 20 22 24 26 Flower Production Q U

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given the following diagram of a production possibilities frontier for a country. Assume that this country produces only two types of goods, capital goods (K) and consumer goods (C). (Graph is not drawn to scale.) CAPITAL GOODS(K) LACO,250) B(109 200) C C200, ISo) D(300, l00) E(GO0,0) CONSUMER 6000S (C) d. What is the opportunity cost of producing 1 more unit of consumer goods if the economy is currently producing at point D?
Apples (pounds) Your Production and Consumption After Trade 15- 10 15 20 Cherries (pounds) Your consumption point before trade is illustrated by point (Enter your response as a letter.) Your Neighbor's Production and Consumption After Trade Apples (pounds) 10 20 30 40 50 60 Cherries (pounds)
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Assume that two countries, A and B, can produce Beef and Barbecues and the production possibilities frontiers of two countries are represented by: Country A: Beef = 30 - 1.25 BBQ and Country B: BBQ = 15 - 0.5 Beef Barbecues are measured in units, beef in kilograms. a) On a single chart, graph the production possibility frontiers for Country A and for Country B. Make sure you use a good scale and mark all your axes and important curves or points. b) Interpret the slope and the shape of the PPF for each country and make the relevant comparisons. c) Assume that each country allocates half of its resources to the production of beef and half of its resources to the production of barbecues. Under autarky (No trade), how much would each country consume of the two products? Plot these points on the graph as Ca and Cb respectively d) Should either of these countries specialize in the production of beef and/or barbecues? If yes, explain which country and which products and why. If they…
9. Draw a PPF curve for the macroeconomy of Germany (a large producer of capital goods). Assume that Germany has an unemployment rate of 7%. (Hint: draw the dashed line assuming a full employment level of 4.5% unemployment rate and consider only consumption and capital goods in the economy.)
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The primary benefit that results when a nation employs its resources in accordance with the principle of comparative advantage is? a.an expansion in investment resulting from a reallocation of resources away from consumption. b.an increase in the profitability of business enterprises resulting from an increase in investment. c.greater equality of income resulting from an increase in the number of workers. d.a larger output resulting from a more efficient use of resources.
1 Answer the following questions: Your hard work was rewarded by a bonus payment of RMB 7000 from your employer. You decided to spend the entire RMB 7000 on buying a new Huawei cellphone although you have a less preferred option of going to Guangzhou for a short trip by spending RMB 5000. Is there an actual (explicit) cost of getting the Huawei phone? What is the opportunity cost concemned - RMB 0, RMB 5000 or RMB 7000? Explain your answer. [Hint: By explicit cost, consider if any money comes from your own pocket] If the decision to buy the cellphone remains valid, but there has been no bonus payment and you have to pay for the phone with your own money. Will the opportunity cost be different from your answer in part a.? Explain. You made a RMB 1000 deposit in your Piggy bank on getting a new iPhone priced at RMB 9000 (i.e. RMB 8000 has yet to be paid to get the phone) which you thought was totally worth it. Before completing the transaction, you came to realize that a new Huawei…
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1. The countries France and Italy produce Perfumes and Leather Coats using only labor as an input. AvailableLabor for France and Italy is 3000 and 1000 respectively. Unit of labor per Leather Coat in France is 6 units and inItaly are 2 units. France needs 2 units of labors to produce 1 bottle of Perfume and Italy needs 4 unit of labor. a) Draw the Production Possibility Curve by using relevant information. b) Which country has the comparative advantage in producing Perfume?
3. Using the graphs of and as functions of labor, graphically show that the PPF has a bowed shape (concave toward the origin). Hint: use the graph with 4 quadrants fromlecture.
K The figure to the right shows various points on three different production possibilities frontiers for a nation. is the result of advancements in plastic A movement from production technology. A. W to X B. V to X C. Y to Z D. Z to W Food products Plastic products