Use the following information to work Problems 1 to 3. Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. Suppose that Brazil's production possibilities for ethanol and food crops are as follows Ethanol (barrels per day) 70 64 54 40 22 0 and and and and and and Food crops (tons per day) 0 1 2 3 1. a. Draw a graph of Brazil's PPF and explain how your graph illustrates scarcity. b. If Brazil produces 40 barrels of ethanol a day, how much food must it produce to achieve production efficiency? c. Why does Brazil face a tradeoff on its PPF? 2. a. If Brazil increases its production of ethanol from 40 barrels per day to 54 barrels per day, what is the opportunity cost of the additional ethanol? b. If Brazil increases its production of food crops from 2 tons per day to 3 tons per day, what is the opportunity cost of the additional food? c. What is the relationship between your answers to parts (a) and (b)? 3. Does Brazil face an increasing opportunity cost of ethanol? What feature of Brazil's PPF illustrates increasing opportunity cost?

Use the following information to work Problems 1 to 3. Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. Suppose that Brazil's production possibilities for ethanol and food crops are as follows Ethanol (barrels per day) 70 64 54 40 22 0 and and and and and and Food crops (tons per day) 0 1 2 3 1. a. Draw a graph of Brazil's PPF and explain how your graph illustrates scarcity. b. If Brazil produces 40 barrels of ethanol a day, how much food must it produce to achieve production efficiency? c. Why does Brazil face a tradeoff on its PPF? 2. a. If Brazil increases its production of ethanol from 40 barrels per day to 54 barrels per day, what is the opportunity cost of the additional ethanol? b. If Brazil increases its production of food crops from 2 tons per day to 3 tons per day, what is the opportunity cost of the additional food? c. What is the relationship between your answers to parts (a) and (b)? 3. Does Brazil face an increasing opportunity cost of ethanol? What feature of Brazil's PPF illustrates increasing opportunity cost?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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