ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Concept explainers
Question
Chapter 2, Problem 3.7P
(a)
To determine
To graph: The
b)
To determine
The meaning of shift of PPFand the adjustments needed to be incorporated in the personal life to make such PPF shift.
c)
To determine
The reason for the outward shift of PPF and whether the shift would be parallel one.
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Refer to the following production possibilities table for consumer goods (automobiles) and capital goods (forklifts):
Production Alternatives
Type of Production
Automobiles
A
B
D
2
4
8
Forklifts
30
27
21
12
a. Show these data graphically.
Instructions: Use the tool provided 'PPC' to draw a PPC curve (plot 5 points total).
10
Tools
8
PPC
6.
4
10
20
30
40
50
Forklifts
Upon what specific assumptions is this production possibilities curve based?
(Click to select)
b. If the economy is at point C, what is the (opportunity) cost of 2 more automobiles?
What is the (opportunity) cost of 6 more forklifts?
Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length?
(Click to select)
Automobiles
a) Draw a production possibilities frontier (PPF) for a society that produces two goods, guns and wheat.
Suppose this society has two political parties, party R (who want a strong military) and party L (who want a smaller military). Show points on your diagram that party R and party L chooses.
b) Show graphically whether your PPF will change if all the resources used for both the goods were equally suitable for production of guns and wheat?
c) Assuming that b stands and if all the resources are used for the production of guns, 20 guns can be produced and if all the resources are used for production of wheat, 80 units of wheat can be produced, then what is the opportunity cost of producing one gun?
8. Shifts in production possibilities
Suppose the United States produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities
frontier for alfalfa, an agricultural good, and industrial copiers, a capital good.
Drag the production possibilities frontier (PPF) on the graph to show the effects of a breakout of avian flu that sickens millions of workers.
Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will
snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.
540
450
PPF
380
270
180
90
PPF
100
200
300
400
500
600
ALFALFA (Millions of bushels)
INDUSTRIAL COPIERS (Thousands)
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- 2. Consider an economy that produces only two goods: asparagus and candy canes. The following table describes the quantities of each good that can be produced: Candy Canes 60 40 20 0 Asparagus 0 10 20 30 (a) Plot the production possibilities frontier for this economy. Be sure to label both axes and each intercept. (b) Does this PPF follow the law of increasing opportunity cost? Why or why not? (c) A major pandemic arises that wipes out one third of the population. Illustrate and explain how this would affect the PPF from part (a).arrow_forwardC and Darrow_forward1. Assume you are on an iceland, where you can produce different combinations of coconuts and fish that can be harvested in a given week. The table below shows these combinations. Notice that you can produce either all crabs, all pineapples, or a mix of the two. Coconuts Fish 25 3 15 4 12 5 a) Draw PPF using the information from this table; b) Calculate opportunity cost of coconuts if you decide to increase their harvest from 3 to 5; c) Calculate the slope of the PPF if you increase their harvest from 3 to 5; d) Will you harvest 5 coconuts and 12 fish on any day of the week? Why? e) Will you harvest 5 coconuts and 4 fish on any day of the week? Why?arrow_forward
- Refer to the following production possibilities table for consumer goods (automobiles) and capital goods (forklifts): Production Alternatives Type of Production A B D E Automobiles 4 8 Forklifts 30 27 21 12 a. Show these data graphically. Instructions: Use the tool provided 'PPC' to draw a PPC curve (plot 5 points total). 10 Tools 8 PPC 4 2 10 20 30 40 50 Forklifts Upon what specific assumptions is this production possibilities curve based? (Click to select) Automobilesarrow_forward2.) Suppose that Bob and Jimmy both have 10 hours of time that they can use to do one of two things: make pasta or make hamburgers. Bob can make 15 hamburgers in one hour and 3 plates of pasta in one hour. Jimmy can make 8 hamburgers in one hour and 2 plates of pasta in one hour. a.) Graph Bob and Jimmy’s PPFs using hamburgers as your x variable. Solve for both PPFs in y = mx + b form. b.) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pasta?arrow_forward4. Shifts in production possibilities Suppose the fictional country of Olympia produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for rye, an agricultural good, and microprocessors, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a time-saving innovation in the manufacturing of microprocessors. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. ? MICROPROCESSORS (Thousands) 400 400 320 240 160 80 100 270 PPF W م PPFarrow_forward
- 4. Shifts in production possibilities Suppose the United Kingdom produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for barley, an agricultural good, and cars, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of an immigration law that results in fewer workers entering the country. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. ? CARS (Thousands) 300 250 200 150 100 50 0 0 80 PPF 160 240 320 BARLEY (Millions of bushels) 400 480 6 PPFarrow_forward4. Shifts in production possibilities Suppose the fictional country of Denali produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for rye, an agricultural good, and telephoto lenses, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a breakout of avian flu that sickens millions of workers. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. TELEPHOTO LENSES (Thousands) 540 450 360 270 180 90 0 0 100 200 PPF 300 400 500 BOU PPFarrow_forwardQuestion 16 Homework • Unanswered Suppose that in the country of England, two goods can be produced on available agricultural land: wine and wool. Suppose that the opportunity costs of production are constant, so that the PPF is a straight line. Further, when all resources are devoted to wine production, England can produce 200 (thousand) barrels. When all resources are devoted to wool production, England can produce 400 (thousand) bushels of wool. What are the opportunity costs in England of producing a barrel of wine? Type your numeric answer and submitarrow_forward
- 4. Shifts in production possibilities Suppose Spain produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for alfalfa, an agricultural good, and locomotives, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a breakout of avian flu that sickens millions of workers. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. (? 420 PPF 350 280 210 140 70 PPF 40 80 120 160 200 240 ALFALFA (Millions of bushels) LOCOMOTIVES (Thousands)arrow_forwardI need your help please help me give you many upvotesarrow_forward6. Efficiency in the production possibilities model Suppose Italy produces only two goods: potatoes and cars. The following graph shows Italy's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. A B с D E CARS (In millions) F 100 8 60 9 8 0 PPF <+ U 0 Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, feasible, or infeasible. Check all that apply. Point Inefficient Efficient Feasible U U L 0 xc U E 40 60 POTATOES (In millions) xo 00 000 100 Infeasible 000 ? 000 Carrow_forward
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