10.3. Suppose the production possibility frontier for guns (X) and butter (Y) is given by x² + 2Y? = 900 a. Graph this frontier. b. If individuals always prefer consumption bundles in which Y = 2X, how much X and Y will be produced? c. At the point described in part b, what will be the slope of the production possibility frontier, and what price ratio will cause production to take place at that point? (Hint: By using the approach in the numerical exam- ples in this chapter, show that the slope of this pro- duction possibility frontier is -X/2Y.) d. Show your solution on the figure from part a.

10.3. Suppose the production possibility frontier for guns (X) and butter (Y) is given by x² + 2Y? = 900 a. Graph this frontier. b. If individuals always prefer consumption bundles in which Y = 2X, how much X and Y will be produced? c. At the point described in part b, what will be the slope of the production possibility frontier, and what price ratio will cause production to take place at that point? (Hint: By using the approach in the numerical exam- ples in this chapter, show that the slope of this pro- duction possibility frontier is -X/2Y.) d. Show your solution on the figure from part a.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.1P

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