Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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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%
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 by
a. Draw 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? b. Use a production possibilities frontier to describe the idea of “efficiency.”
Chapter 2 Solutions
Principles of Microeconomics
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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
- 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_forwardWhat does the Powerbar model tell us about how creativity fits into a market economy?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
- Many 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_forwardEva finds that there is not enough time after work to have dinner, exercise, and watch TV, and she must make choices about how to use her limited time. For instance, if she chooses to exercise, she would need to give up watching TV. This example best illustrates which of the following four key ideas in Economics? Select one: a. the invisible hand principle b. gains from trade c. opportunity cost d. net marginal benefitarrow_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_forward
- Draw 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_forwardQUESTION 2 Consider the Production possibility frontier model. Efficiency means that the economy produces inside the production possibilities frontier. the economy produces outside the production possibilities frontier. the economy produces on or inside the production possibilities frontier. the economy produces on the production possibilities frontier. a. b. C. d. a O b O c O d QUESTION 3arrow_forwardThe production possibilities frontier curve illustrates that a. an economy's capacity to produce is unrelated to its population. b. if all the resources of an economy are being used efficiently, more of one good can be produced only if more of another good is produced. c. an economy will automatically move toward a point at which all of its resources are being used inefficiently. d. if all the resources of an economy are being used efficiently, more of one good can be produced only if less of another good is produced.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_forwardDraw and explain a production possibilities frontier for an economy that produces milk and cookies. Use a production possibilities frontier to describe the idea of “efficiency.”arrow_forwardDraw and explain a production possibilities frontier for an economy that produces milk and cookies. What happens to this frontier if disease kills half of the economy's cows?arrow_forward
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