Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
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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.
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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 (13th Edition)
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. 2.3 - Prob. 6RQCh. 2.3 - Prob. 7RQCh. 2.4 - Prob. 1RQCh. 2.4 - Prob. 2RQCh. 2.4 - Prob. 3RQCh. 2.4 - Prob. 4RQCh. 2.4 - Prob. 5RQCh. 2.4 - Prob. 6RQCh. 2.4 - Prob. 7RQCh. 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. 7SPACh. 2 - Prob. 8SPACh. 2 - Prob. 9SPACh. 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. 18APACh. 2 - Prob. 19APACh. 2 - Prob. 20APACh. 2 - Prob. 21APACh. 2 - Prob. 22APACh. 2 - Prob. 23APACh. 2 - Prob. 24APACh. 2 - Prob. 25APA
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