CONNECT F/MICROECONOMICS
21st Edition
ISBN: 2810022151240
Author: McConnell
Publisher: MCG
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Question
Chapter 1, Problem 8P
To determine
The graphical analysis of present goods versus future goods to explain the differences in growth rates.
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On average, households in China save 40 percent of their annual income each year, whereas households in the United States save
less than 5 percent. Production possibilities are growing at roughly 9 percent annually in China and 3.5 percent in the United States.
Use graphical analysis of "present goods" versus "future goods" to explain the differences in growth rates.
Goods for the future (Capital)
PPC3
100
90-
80
70
60-
50-
40-
30-
20-
10
0
0
Production Possibilities
(United States)
PPC₂
PPC₁
B
10 20 30 40 50
A
60
70
Goods for the present
80 90 100
Future Goods
100
90-
80-
70
60-
50+
40
30-
20-
10-
0
PPC3
PPC₂
PPC₁
B
0 10
20
Instructions: Refer to the diagram on the left.
Which point best represents the combination of present and future goods in the U.S.? (Click to select)
Which dashed production possibilities curve best represents future growth in the U.S.?(Click to select)
Instructions: Refer to the diagram on the right.
Which point best represents the combination of present and…
Suppose that households have one child each and an income of M per year to spend on their child's education and other goods. Each year they elect to either send their children to a Public School and receive $21,000 worth of education
or to a Private School and pay $X to receive $14,000+$X worth of education. For example, if a household chooses to spend X=$5,000 on private education, then they receive $19,000 in education.
Students
Government
Subsidy
Fee
Total Funding
Public School
2.50 million
$21,000
$0
$21,000
Private School
1.50 million
$14,000
$X*
$x*+$14,000
Assume that $ of education funding whether provided by Government Schools or Private Schools are perfect substitutes. Note that for the Private school option, the $14,000 is effectively added to income as a voucher (V), which households
can top up with their own spending X on education. Note that households cannot spend more on other goods than their income (that is they may not exchange the Government funding for cash).
All…
10. Jack and Jill work together at an IT company. They are asked to write a new
piece of code to fix a bug in some company software, and then they have to give a
presentation about it to their colleagues. Between the two of them, Jill works
faster. She could write the code in 6 hours, and prepare the presentation in 1
hour. Jack works slower. He would take 7 hours to write the code, and 2 hours to
prepare the presentation. Now assume that they have to divide their tasks so that
precisely one person works on the code and one person works on the presentation.
Who should work on what? Use the concept of comparative advantage in your
explanation.
Chapter 1 Solutions
CONNECT F/MICROECONOMICS
Ch. 1.2 - Prob. 1QQCh. 1.2 - Prob. 2QQCh. 1.2 - Prob. 3QQCh. 1.2 - Prob. 4QQCh. 1.A - Prob. 1ADQCh. 1.A - Prob. 2ADQCh. 1.A - Prob. 3ADQCh. 1.A - Prob. 1ARQCh. 1.A - Prob. 2ARQCh. 1.A - Prob. 1AP
Ch. 1.A - Prob. 2APCh. 1.A - Prob. 3APCh. 1.A - Prob. 4APCh. 1.A - Prob. 5APCh. 1.A - Prob. 6APCh. 1.A - Prob. 7APCh. 1.A - Prob. 8APCh. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8P
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