Economics (Book Only)
12th Edition
ISBN: 9781285738321
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 2, Problem 3WNG
To determine
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Draw a PPF that represents the production possibilities for goods X and Y if there are constant opportunity costs. Next, represent an advance in technology that makes it possible to produce more of X but not more of Y. Finally, represent an advance in technology that makes it possible to produce more of Y but not more of X.
Draw a PPF for butter and guns production.a. Explain verbally and graphically the concept of “free lunch.”
b. Explain verbally and graphically what movement between two production points on the PPF represents.Does this qualify as “a free lunch?” Why or why not?
Suppose Martha and Julia both work at a bakery making bread and muffins. In an hour, Martha can either make 10 loaves of bread or 40 muffins, while Julia can either make 12 loaves of bread or 60 muffins. Both Martha and Julia work 8 hours a day.
Draw Martha's daily PPC.
Draw Julia's daily PPC.
What is the opportunity cost to each of making one loaf of bread?
What is the opportunity cost to each of making one muffin?
Who has the comparative advantage in making bread? Why?
Who has the absolute advantage in making bread? Why?
Suppose you are the owner of the bakery. If Julia and Martha are currently both spending all of their time making muffins, then which of them should you ask to start making bread?
Draw the combined daily PPC of Martha and Julia.
Suppose you are the owner of the bakery. If you want 500 muffins to be made in a day, then how are you going to assign the work between Martha and Julia?
Chapter 2 Solutions
Economics (Book Only)
Ch. 2.1 - Prob. 1STCh. 2.1 - Prob. 2STCh. 2.1 - Prob. 3STCh. 2.1 - Prob. 4STCh. 2 - Prob. 1VQPCh. 2 - Prob. 2VQPCh. 2 - Prob. 3VQPCh. 2 - Prob. 4VQPCh. 2 - Prob. 5VQPCh. 2 - Prob. 1QP
Ch. 2 - Prob. 2QPCh. 2 - Prob. 3QPCh. 2 - Prob. 4QPCh. 2 - Prob. 5QPCh. 2 - Prob. 6QPCh. 2 - Prob. 7QPCh. 2 - Prob. 8QPCh. 2 - Prob. 9QPCh. 2 - Prob. 10QPCh. 2 - Prob. 11QPCh. 2 - Prob. 12QPCh. 2 - Prob. 1WNGCh. 2 - Prob. 2WNGCh. 2 - Prob. 3WNGCh. 2 - Prob. 4WNGCh. 2 - Prob. 5WNGCh. 2 - Prob. 6WNGCh. 2 - Prob. 7WNGCh. 2 - Prob. 8WNGCh. 2 - Prob. 9WNG
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- The figure below depicts the production possibilities curve (PPC) of a country. It also depicts the consumption possibilities curve (CPC) when the country is engaged in trade with one other country. Point C is this country's consumption when that trade occurs. Quantity of 350 good y 300 250 200 150 100 50 0 0 20 40 19 C 60 80 100 120 Quantity of good x Calculate how much this country trades with the other country in good y when the two countries engage in free trade. Enter a whole number only. Enter a positive number if this country exports good y, and a negative number if it imports it. Enter O if the answer cannot be obtained with the information given. Since this is a graphical question, approximate answers (within 20 of the exact answer) are accepted. Hint: consider how much the country produces and consumes this good.arrow_forwardSuppose 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 bushel of wool?arrow_forwardCreate a PPF to manufacture butter and guns.a. Explain verbally and graphically the concept of "free lunch."b. Explain verbally and graphically what movement on the PPF signifies between two production points. Is this regarded as "a free lunch?" What is your justification?arrow_forward
- In the PPF below, if the economy moves from point A to point B, opportunity cost will: Hybrid cars A decrease. increase. not change. B Motorcycles F D Earrow_forwardmicroeconomics help.arrow_forwardBecause of conflict and instability in Country X, millions of its citizens emigrate to Country Y. Which of the following best explains what will happen to Country Y's production possibilities curve (PPC)? A C E It will move to a point on its PPC at which it produces only consumer goods B It's PPC will not change, but consumption of goods will decrease Its PPC will shift outward over time-- D It will move to a point inside its PPC, indicating slower growth Its PPC will shift inward over timearrow_forward
- Demonstrate the law of increasing costs with a PPF. Show and explain how it works.arrow_forwardBefore the first Gulf War, Kuwait had the capacity to produce a certain amount of oil from its oil wells. After the war, it found that capacity greatly diminished because the oil wells were on fire. Draw Kuwait's PPF before and after the war, assuming that the only two goods produced are oil and food. Further assume that setting the oil wells on fire did not affect Kuwait's ability to produce food. Explain why the PPF before the war is different from the PPF after the war.arrow_forwardRubric: Students can show how the PPF shift should all 10 resources be placed into the production of one good versus another. PPF accurately labelled. Can be shown on 1 or 2 graphs.arrow_forward
- Two countries, Lambdastan and Kappastan, have identical PPFs. Their production possibilities frontiers are illustrated below. Kappastan produces at point K on its frontier, and Lambdastan produces at point L on its frontier. Which country will grow faster in the future? Explain verbally. Draw Kappastan's new PPF and Lambdastan's new PPF. Capital goods (millions per year) Consumption goods (millions per year)arrow_forwardConsider the PPF of a country with movies on the horizontal axis and computers on the vertical axis. Show the effects of each of the following: If the economy increases its production of computers relative to movies, impossibilities will be converted into possibilities.” Illustrate this statement with the PPF and explain what it means.arrow_forwardPPF 16 14 Without Trade 12 With Trade 6. 4 0. 50 100 150 200 250 300 350 400 Wheat (millions of bushels) Now suppose that the United States offers to sell 10 million cars to Mexico in exchange for 150 million bushels of wheat. On the previous graph, use the grey point (star symbol) to indicate the consumption bundle Mexico can achieve with trade if it continues to consume 200 million bushels of wheat. Мexico accept the deal the United States proposes. Cars (millions) 10arrow_forward
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