Principles of Macroeconomics, Loose-Leaf Version
8th Edition
ISBN: 9781337096881
Author: Mankiw, N. Gregory
Publisher: South-Western College Pub
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Question
Chapter 2, Problem 2PA
Subpart (a):
To determine
Production possibility frontier .
Sub part (b):
To determine
Production possibility frontier.
Sub part (c):
To determine
Production possibility frontier.
Sub part (d):
To determine
Production possibility frontier.
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Imagine a society that produces military goods and consumer goods, which we'll call
"guns" and "butter."
a. Draw a production possibilities frontier for guns and butter. Using the concept of
opportunity cost, explain why it most likely has a bowed-out shape.
b. Show a point that is impossible for the economy to achieve. Show a point that is
feasible but inefficient.
c. Imagine that the society has two political parties, called the Hawks (who want a
strong military) and the Doves (who want a smaller military). Show a point on your
production possibilities frontier that the Hawks might choose and a point the Doves
might choose.
- 66%
Drawing a production possibilities frontier (PPF)
Instructions:
Consider an economy than only produces two goods - Blueberries and Batteries.
Step 1: Draw a production possibilities frontier (PPF) for this economy. Label blueberries on the vertical axis and batteries on the horizontal axis. Label one point that is "efficient", one point that is "inefficient", and one point that is "unattainable".
Step 2. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was a technological change that increased the production of batteries only. (Hint: The intercept for blueberries will not change.) Clearly label the new PPF.
Step 3. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was a drought that destroyed some of the blueberry harvest. (Hint: The intercept for batteries will not change.) Clearly label the new…
Consider an economy than only produces two goods - Blueberries and Batteries.
Step 1: Draw a production possibilities frontier (PPF) for this economy. Label blueberries on the vertical axis and batteries on the horizontal axis. Label one
point that is "efficient", one point that is "inefficient", and one point that is "unattainable".
Step 2. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was
a technological change that increased the production of batteries only. (Hint: The intercept for blueberries will not change.) Clearly label the new PPF.
Step 3. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was
a drought that destroyed some of the blueberry harvest. (Hint: The intercept for batteries will not change.) Clearly label the new PPF.
Step 4: Draw another PPF of the economy with the axes labeled. Grab…
Chapter 2 Solutions
Principles of Macroeconomics, Loose-Leaf Version
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- The three economic questions that every society must answer are OA. What are the prices of goods, how are they determined, and who will pay for them? OB. What economic system will be used, how will it be implemented, and who will make market decisions? OC. What goods will be produced, how will they be produced, and who will receive the goods? OD. What kind of government will the society have, how will it be run, and who will run it? Centrally planned economies allocate resources based on decisions by while market economies answer these questions through decisions made byarrow_forwardI think my answer is right. I am between b and c. C is true I'm almost sure. Can you please check and explain?arrow_forwardDraw and explain a production possibilities frontier for an economy that produces cheese and milk. What happens to this frontier if a disease kills half of the economy’s cows? Use a production possibilities frontier to describe the idea of “efficiency.” kindly solve both parts.arrow_forward
- What is the production possibilities frontier? A. a map that shows areas of the world in which capitalist production is highest B. a map that shows the frontier beyond which technological innovation is unprofitable C. a graph that shows the various combinations of resources that can be used to produce a given level of output D. a graph that shows the various combinations of output the economy can possibly produce given the available resources and technologyarrow_forwardMany people think that soda consumption also leads to increased obesity. Many schools have banned the sale of soda in vending machines. Use the idea of opportunity costs to explain why some people think these bans will reduce consumption. Do you agree?arrow_forwardDraw a production possibilities curve for food and clothing. If you are operating on the curve, what is the opportunity cost of producing more clothing? If you are on the curve, is it possible to increase production of one good without decreasing the production of the other?arrow_forward
- Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis. As a country moves along the frontier closer to the vertical axis, A) inefficient production occurs. B) there are fewer tradeoffs. C) the opportunity cost of producing jeans increases. D) the opportunity cost of producing jeans decreases. the opportunity cost of producing shoes increases.arrow_forwardExplain why a movement from a point inside a production possibilities frontier to the production possibilities frontier can be described as a free lunch and a movement along a production possibilities frontier is described as a tradeoff.arrow_forward“Scarcity is the fundamental problem that every nation in this world faces.” What do you mean by this statement? If you were an economist how would you address this fundamental problem?arrow_forward
- What does the Powerbar model tell us about how creativity fits into a market economy?arrow_forwardSuppose an economy produces clothing and food only. The following table shows the production possibilities of the economy: i. How does the production possibilities frontier indicate the potential of the economy? ii. What is the economy's total opportunity cost of producing 700 pounds of food? Show the steps of your calculation. iii Suppose the economy is currently producing at point C. What is the marginal opportunity cost of producing an additional pound of clothing? Show the steps of your calculation.arrow_forwardQuestion 4 Which of the following statements about the production possibility frontier is correct? It is a tool a social planner would use to allocate goods to individuals. Its slope is also the marginal opportunity cost of the good on the x-axis. It illustrates the allocation of workers towards the production of two goods. Its slope is also the marginal opportunity cost of the good on the y-axis. Question 5 Suppose you grow tomatoes and cucumbers on your balcony. If you must give up growing 12 tomato plants to be able to grow 3 cucumber plants, then your opportunity cost of growing 1 cucumber plan is 4 tomato plants 3 tomato plants 1 tomato plant 2 tomato plantsarrow_forward
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