# Plot the Ppc of a Nation Essay

871 WordsJul 6, 20114 Pages
7. Plot the PPC of a nation given by the following data. Combination Health Care All Other Goods A 0 100 B 25 90 C 50 70 D 75 40 E 100 0 a. Calculate the marginal opportunity cost of each combination. When going from A to B the opportunity cost of each unit of Healthcare is 10/25. When going from B to C it is 20/25, from C to D it is 30/25, and from D to E it is 40/25. You can find this for any good by using the formula, Opportunity Cost = What You Lose/ What You Gain. b. What is the opportunity cost of combination C? This requires that you find the opportunity cost at a point, and not over an interval. There are various ways…show more content…
Though some people might disagree with this. Combination Health Care All Other Goods A 0 50 B 20 40 C 40 25 D 60 5 E 65 0 Chapter 3 Questions 1, 3, & 4 1. Illustrate each of the following events using a demand and supply diagram for bananas. a. Reports surface that imported bananas are infected with a deadly virus. Demand will fall. Shown by D2 in the graph. b. Consumers’ incomes drop. Demand will fall. Again shown by D2 in the graph. c. The price of bananas rises. Since they do not say any reasons for the rise in prices we cannot say that the demand will fall, we can only say that quantity demanded falls. This might be cause by a shift in supply to S2. d. The price of oranges falls. Assuming oranges and bananas are complements again this will reduce the demand for bananas. Shown by movement to D2 in the graph. e. Consumers expect the price of bananas to decrease in the future. In that case people reduce banana consumption today. Reduction in demand, movement to D2. 3. Using the following schedule, define the equilibrium price and quantity. Describe the situation at a price of \$10. What will occur? Describe the situation at a price of \$2. What will occur? Price Quantity Demanded