5. To the right is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): LO1.6 a. Show these data graphically. Upon what specific assump- tions is this production possibilities curve based? b. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? hich charac- teristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? c. If the economy characterized by this production possi- bilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources?

5. To the right is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): LO1.6 a. Show these data graphically. Upon what specific assump- tions is this production possibilities curve based? b. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? hich charac- teristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? c. If the economy characterized by this production possi- bilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter13: General Equilibrium And Welfare

Section: Chapter Questions

Problem 13.12P

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11.Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve: LO5 a.The quality of education increases. b.The number of unemployed workers increases. c.A new technique improves the efficiency of extracting copper from ore. d.A devastating earthquake destroys numerous production facilities.
From the list below, select the characteristics thatdescribe a good economic model. [LO 1.6]a. Includes every detail of a given situation.b. Predicts that A causes B.c. Makes approximately accurate assumptions.d. Fits the real world perfectly.e. Predicts things that are usually true.
Each statement below is part of an economicmodel. Indicate whether the statement is a prediction of cause and effect or an assumption. [LO 1.6]a. People behave rationally.b. If the price of a good falls, people will consume more of that good.
Think about how and why goods and resourcesare scarce. Goods and resources can be scarcefor reasons that are inherent to their nature at alltimes, temporary or seasonal, or that are artificially created. Separate the goods listed below into two groups; indicate which (if any) are artificiallyscarce (AS), and which (if any) are inherentlyscarce (IS). [LO 1.1]a. air of any qualityb. landc. patented goodsd. original Picasso paintings
Suppose you have two job offers and are considering the trade-offs between them. Job A pays$45,000 per year and includes health insurance andtwo weeks of paid vacation. Job B pays $30,000 peryear and includes four weeks of paid vacation butno health insurance. [LO 1.2]a. List the benefits of Job A and the benefits ofJob B.b. List the opportunity cost of Job A and theopportunity cost of Job B
You rent a car for $29.95. The first 150 miles are free, but each mile thereafter costs 15 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car? (LO1-2) Suppose you currently earn $30,000 a year. You are considering a job that will increase your lifetime earnings by $300,000 but that requires an MBA. The job will mean also attending business school for two years at an annual cost of $25,000. You already have a bachelor’s degree, for which you spent $80,000 in tuition and books. Which of the above information is relevant to your decision on whether to take the job? (LO1-2)
Suppose a typical American consumer purchases three goods, creatively named good A good B. and good The prices of these goods are listed in Table 8P-2. [LO 8.1 aIf the typical consumer purchases two units of each good, what was the percentage increase in the price paid by the consumer for this basket between 2015 and 2016? b If the typical consumer purchases 10 units of good B and 2 units of both good A and good C what was the percentage increase in the price paid by the consumer for this basket? c. Given your answers to parts a and b what is the relationship between the market basket and the nements price change ?
Table 8P-4 lists the prices and quantities consumed of three different goods from 2014-2016. [LO 8.2] a. For 20142015, and 2016, determine the amount 4, 20 that a typical consumer pays each year to pur chase the quantities listed in the table. b. Using the amounts you found in part a, calculate the percentage change in the amount the con sumer paid from 2014 14 to 2015 , and from 2015 to 2016. c. Why is it problematic to use your answers to part b as a measure of inflation ? d. Suppose we take 2014 as the base year, which implies that the market basket is fixed at the 2014 consumption levels. Using 2014 consump tion levels, now find the rate of inflation from 2014 to 2015 and from 2015 to 2016. (Hint : First calculate the cost of the 2014 market basket using each year's prices and then find the per centage change in the cost of the basket. ) e. Repeat the exercise from part d, now assuming that the base year is 2015. f. Why were your answers from parts d and e different?
Suppose that three volunteers are preparingcookies and cupcakes for a bake sale. Diana canmake 27 cookies or 18 cupcakes per hour; Andycan make 25 cookies or 17 cupcakes; and Sam canmake 10 cookies or 12 cupcakes. [ LO 2.2]a. Who has the absolute advantage at makingcookies?b. At making cupcakes?
Suppose the price of a sweater is $15. Julia’s benefit from purchasing each additional sweater isgiven in the table below. Julia gets the most benefitfrom the first sweater and less benefit from eachadditional sweater. If Julia is behaving rationally,how many sweaters will she purchase? [LO 1.2]Marginal benefit ($)1st sweater 502nd sweater 353rd sweater 304th sweater 235th sweater 126th sweater 8
4. a. Suppose that you are on a deserted island and can produce either 32 tons of coconuts OR 16 tons of pineapples. Draw the PPF representing this situation. Assume that coconuts are on the x-axis. Also assume that the PPF is linear. Clearly label your graph. b. For each of the following combinations say whether they are attainable (feasible) or unattainable (infeasible), based on the above information. If they are feasible, say whether they are efficient or inefficient. Also, label the three points on the graph above. (i) 8 tons of coconuts and 12 tons of pineapples: (ii) 16 tons of coconuts and 3 tons of pineapples:
Assume China has 10,000 workers. Suppose that each Chinese worker produces either 30 pairs of boots or 10 software per month. Suppose that half of Chinese workers produce boots and half produce programs. What quantities of boots and software does China produce? Are these production combinations efficient? Select one: O a. China produces 50,000 pairs of boots and 150,000 software per month. These production combinations are efficient O b. China produces 150,000 pairs of boots and 50,000 software per month. These production combinations are efficient. O c. China produces 50,000 pairs of boots and 150,000 software per month. These production combinations are not efficient. O d. China produces 150,000 pairs of boots and 50,000 software per month. These production combinations are not efficient.