Answered: Why does this PPF have a bowed-out…

Why does this PPF have a bowed-out shape? How can the economy increase its production of both tea and snacks? Graph the PPF with and show an increase in its production.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.

Question

Why does this PPF have a bowed-out shape?

How can the economy increase its production of both tea and snacks?

Graph the PPF with and show an increase in its production.

Tea
A
B
C
D
E
O
1
2
3
4.
As
2
Snacks
14
13
10
6
0

Definition Definition Curve that represents the various combinations of production possibilities of two commodities when resources or factors of production are given.

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A В Bread On the PPF above, the economy is currently at point B. How can the economy produce at point E? By producing less wine. By producing less bread. Through economic growth due to more resources or better technology. This economy will never be able to product at point E. Wine
Suppose that the US economy produces agricultural products (A) and manufactured products (M). Explain and graphically illustrate the impact of each of the following events on the economy’s production possibilities curve (draw a new PPF for each, placing M on the vertical axis). a. Scientists develop a new fertilizer that will increase the productivity of land on which agricultural products are grown. b. The price of manufactured goods increases. c. Russian attacks on Ukraine devastate the Ukrainian wheat crop, increasing their demand for American wheat. d. The government increases taxes on manufactured goods.
Graph A Graph B Graph C Graph D Which of the above 4 graphs best represents the change in the PPF if a tornado destroys part of the country?
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If, next year, the production possibilities curve passes through point W on which point on this year’s production possibility curve (PPC) is it not possible for the economy to be operating? A) 100,144 B) 175,0 C) 80,144 D) 0,210
This question is a file-upload question. Work your answer in a piece of paper, take a picture with your phone and upload the file. Using the table below answer the following: Points Soda Pizza A 10 В 1 6 3 a) Draw a PPF map (put soda in the vertical axis and pizza in the horizontal axis), showing all the points on the PPF. b) What is the opportunity cost of an extra pizza when you are on segment AB? What about when you are at segment CD? (i.e., how many sodas you have to give up in order to get an extra pizza? SHOW YOUR WORK!) c) What is your PPF's shape? Is it a straight line or does it have a bowed outward shape? Justify! d) Suppose that there is a new technology that affects ONLY the production of soda. Illustrate this effect on your PPF map.
Suppose there exist two imaginary countries, Everglades and Yosemite. Their labor forces are each capable of supplying four million hours per day that can be used to produce chinos, pistachios, or some combination of the two. The following table shows the amount of chinos or pistachios that can be produced by one hour of labor. Country Everglades Yosemite Chinos Pistachios (Pairs per hour of labor) (Pounds per hour of labor) 4 6 16 12 Suppose that initially Yosemite uses 1 million hours of labor per day to produce chinos and 3 million hours per day to produce pistachios, while Everglades uses 3 million hours of labor per day to produce chinos and 1 million-hours per day to produce pistachios. As a result, Everglades produces 12 million pairs of chinos and 16 million pounds of pistachios, and Yosemite produces 6 million pairs of chinos and 36 million pounds of pistachios. Assume there are no other countries willing to engage in trade, so, in the absence of trade between these two…