Microeconomics (12th Edition) (Pearson Series in Economics)
12th Edition
ISBN: 9780133872293
Author: Michael Parkin
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 2, Problem 1SPA
(a)
To determine
Identify the role of scarcity on
(a)
Expert Solution
Explanation of Solution
Figure 1 illustrates the PPF of Company B.
In Figure 1, the x-axis shows food crops and the y-axis shows ethanol. The PPF shows the production combinations of ethanol and food crops. The production combinations of these commodities lie beyond the PPF and are not attainable with the given resources; this indicates the concept of scarcity. The movement along the PPF also indicates scarcity because when one good produces more, other goods are reduced.
Economics Concept Introduction
Scarcity: Scarcity refers to the limited availability of resources than the required level.
Production possibility frontier: Production possibility frontier shows the boundary between the combination of two goods and services that can produced at the given level of resources.
(b)
To determine
Identify the concept of production efficiency.
(b)
Expert Solution
Explanation of Solution
A production possibility frontier shows the combination of two commodities that can be produced at the given level of resources. Therefore, the combinations of commodities that lie along the PPF indicate efficient production levels. In this case, if Company B produces 40 barrels of ethanol per day, then the production of food per day needed to achieve the production efficiency will be 3 tons.
Economics Concept Introduction
Efficient production: Efficient production shows the combinations of two commodities that lie along the PPF.
(c)
To determine
Identify the concept of tradeoff in a PPF.
(c)
Expert Solution
Explanation of Solution
A movement along the PPF curve explains that producing more of one good leads to producing less of another good. Therefore, there is a tradeoff that exists between the commodities; it is also noted that this type of tradeoff exists only at an efficient production level. In this case, Company B has limited resources and technology. Therefore, an increase in the production of one good decreases the production of the other good. As a result, Company B will face a tradeoff on its PPF.
Economics Concept Introduction
Production possibility frontier: Production possibility frontier shows the boundary between the combination of two goods and services that can be produced at the given level of resources.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Please answer the question number 2 (a,b,c) only
2. Comparative and absolute advantage
Sam and Teresa are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce
per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on
the rest.
Corn
Rye
(Bushels per acre)
(Bushels per acre)
Sam
40
8
Тeresa
28
7
On the following graph, use the blue line (circle symbol) to plot Sam's production possibilities frontier (PPF), and use the purple line (diamond symbol)
to plot Teresa's PPF.
200
180
Sam's PPF
160
140
Teresa's PPF
120
100
80
60
40
20
100
200 300
400
500 600
700
B00
900 1000
CORN (Bushels)
has an absolute advantage in the production of corn, and
has an absolute advantage in the production of rye.
Sam's opportunity cost of producing 1 bushel of rye is
bushels of corn, whereas Teresa's opportunity cost of producing 1 bushel of rye is
v opportunity cost of producing rye than Teresa,
v has…
B and C
NOT A
Chapter 2 Solutions
Microeconomics (12th Edition) (Pearson Series in Economics)
Ch. 2.1 - Prob. 1RQCh. 2.1 - Prob. 2RQCh. 2.1 - Prob. 3RQCh. 2.1 - Prob. 4RQCh. 2.1 - Prob. 5RQCh. 2.1 - Prob. 6RQCh. 2.2 - Prob. 1RQCh. 2.2 - Prob. 2RQCh. 2.2 - Prob. 3RQCh. 2.2 - Prob. 4RQ
Ch. 2.2 - Prob. 5RQCh. 2.3 - Prob. 1RQCh. 2.3 - Prob. 2RQCh. 2.3 - Prob. 3RQCh. 2.3 - Prob. 4RQCh. 2.3 - Prob. 5RQCh. 2.4 - Prob. 1RQCh. 2.4 - Prob. 2RQCh. 2.4 - Prob. 3RQCh. 2.4 - Prob. 4RQCh. 2.4 - Prob. 5RQCh. 2.5 - Prob. 1RQCh. 2.5 - Prob. 2RQCh. 2.5 - Prob. 3RQCh. 2 - Prob. 1SPACh. 2 - Prob. 2SPACh. 2 - Prob. 3SPACh. 2 - Prob. 4SPACh. 2 - Prob. 5SPACh. 2 - Prob. 6SPACh. 2 - Prob. 8SPACh. 2 - Prob. 9SPACh. 2 - Prob. 7SPACh. 2 - Prob. 10SPACh. 2 - Prob. 11APACh. 2 - Prob. 12APACh. 2 - Prob. 13APACh. 2 - Prob. 14APACh. 2 - Prob. 15APACh. 2 - Prob. 16APACh. 2 - Prob. 17APACh. 2 - Prob. 20APACh. 2 - Prob. 21APACh. 2 - Prob. 22APACh. 2 - Prob. 18APACh. 2 - Prob. 19APACh. 2 - Prob. 23APACh. 2 - Prob. 24APACh. 2 - Prob. 25APA
Knowledge Booster
Similar questions
- 2. Comparative and absolute advantage Larry and Megan are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn Rye (Bushels per acre) (Bushels per acre) Larry 40 8 Megan 28 7 On the following graph, use the blue line (circle symbol) to plot Larry's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Megan's PPF. (?) 200 180 160 140 120 100 80 60 40 20 0 has an absolute advantage in the production of rye. bushels of corn, whereas Megan's opportunity cost of producing 1 bushel of rye is opportunity cost of producing rye than Megan, has a comparative has a comparative advantage in the production of corn. RYE (Bushels) 0 100 200 300 400 500 600 700 800 900 1000 CORN (Bushels) has an absolute advantage in the production of…arrow_forward2. Comparative and absolute advantage Felix and Janet are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of rye and corn each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing rye or corn or to produce rye on some of the land and corn on the rest. Rye Corn (Bushels per acre) (Bushels per acre) Felix 40 8 Janet 28 7 On the following graph, use the blue line (circle symbol) to plot Felix's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Janet's PPF. (?) 200 180 160 140 120 100 80 60 40 20 0 0 100 200 300 400 500 600 700 800 900 1000 RYE (Bushels) Felix has an absolute advantage in the production of rye, and Felix has an absolute advantage in the production of corn. Felix's opportunity cost of producing 1 bushel of corn is bushels of rye, whereas Janet's opportunity cost of producing 1 bushel of corn is bushels of rye. Because Felix has a higher…arrow_forward5. China is able to produce turnips and potatoes in combinations represented by the following table. (Each number represents 1,000s of bushes.) Potatoes Production Turnips point a. B C D E b. C. points. 100 and 0 90 and 10 and 20 and 30 and 40 70 40 0 Plot the data on a production possibilities graph, labeling Can China produce a combination of 30 turnips and 24 potatoes? Draw this production point on the graph (label it F) and verbally explain. Demonstrate that China experiences increasing opportunity costs by calculating the opportunity cost of producing another potato at each production point. Explain.arrow_forward
- Comparative and absolute advantage Elijah and Aneesha are farmers. Each one owns an 18-acre plot of land. The following table shows the amount of squash and maize each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing squash or maize or to produce squash on some of the land and maize on the rest. Squash Maize (Pounds per acre) (Pounds per acre) Elijah 12 3 Aneesha 18 6 On the following graph, use the blue line (circle symbol) to plot Elijah's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Aneesha's PPF. Elijah's PPF Aneesha's PPF 0 90 180 270 360 450 540 630 720 810 900 180 162 144 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward5. Comparative and absolute advantage Kevin and Maria are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the rest. Corn Rye (Bushels per acre) (Bushels per acre) Kevin 40 Maria 28 7 On the following graph, use the blue line (circle symbol) to plot Kevin's production possibilities curve (PPF), and use the purple line (diamond symbol) to plot Maria's PPF. 200 180 Kevin's PPF 160 140 * 120 Maria's PPFarrow_forwardWhat is the answerarrow_forward
- Points on Production Possibilities Frontier Canada China Wheat Computers Wheat Computers A 150 0 90 0 B 100 25 60 60 C 50 50 30 120 D 0 75 0 180 Draw the production possibilities graph for Canada and China and label all of the points on the graph. For which good does Canada have a comparative advantage? For which good does China have a comparative advantage? If Canada and China decide to specialize and trade, how many more computers and bushels of wheat would be available for consumption by both countries? Show the increase on your graphs. Canada and China decide to impose trade restrictions in the form of a tariff on the computers and wheat. What are the costs or benefits to the consumer, producer and government for each country?arrow_forwardPlease help me pleasearrow_forward8arrow_forward
- R Imagine that it costs $40 in the United States to produce one ton of soybeans and transport them to market, while it costs $30 in Brazil to produce one ton of soybeans and transport them to market Imagine that it costs $20,000 in the United States to produce one automobile and transport it to maket, while costs $10,000 in Brazil to produce one automobile and transport it to market. Which of the following four arrangements would be most efficient? (Hint: Derived OC from PPF (production) = 1/OC derived from costs to make ) a. The United States should produce everything, since it can produce both soybeans and automobiles better than Brazil can produce them. Ob. Brazil should specialize and produce only automobiles. The United States should specialize and produce only soybeans. Then the two countries should trade with each other. Brazil will send automobiles to the United States, while the United States sends soybeans to the Brazil. Oc. The United States should specialize and produce…arrow_forward个 The table shows Frigidia's production possibilities. Fish (pounds per month) 300 200 100 0 Draw the four points defined in the table. Use the four-point line tool to draw the PPF. Label it. and and and and Skis (pairs per month) 0 50 100 150 If Frigidia produces 200 pounds of fish per month, how many pairs of skis must it produce to achieve production efficiency? Frigidia must produce pairs of skis to achieve production efficiency. What is Frigidia's opportunity cost of producing 1 pound of fish and 1 pair of skis? pairs of The opportunity cost of 1 pound of fish is skis 300- 250 200- Fish (pounds per month) 150- 100- 50- 25 50 75 100 125 Skis (pairs per month) 150 17!arrow_forwardUsing the PPC in question A answer the following questions (c,d) C. If the economy is producing 3 automobiles and 20 forklifts, what would you conclude about this economies use of resources? D) What would production at a point outside the PPC indicate?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning