5a. Assume that a basket of goods and services costs $30, 000 in If the U.S. and 40,000 Australian dollars (AUD) in Australia. PPP holds, what is Es/AUD ? b. Provide one explanation for why PPP may not hold in the short run.
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5a. Assume that a basket of goods and services costs $30, 000 in
If the U.S. and 40,000 Australian dollars (AUD) in Australia. PPP holds, what is Es/AUD ?
b. Provide one explanation for why PPP may not hold in the short run.
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- Suppose the economy initially produces 15,000 gallons of drinking water and 450,000 tons of steel, which is represented by point A. The opportunity cost of producing an additional 5,000 gallons of drinking water (that is, moving production to point B) is (72,000, 135,000, 90,000, 54,000, 108,000) tons of steelSuppose, instead, that the economy currently produces 378,000 tons of steel and 20,000 gallons of drinking water, which is represented by point B. Now the opportunity cost of producing an additional 5,000 gallons of drinking water (that is, moving to point C) is (72,000, 135,000, 90,000, 54,000, 108,000) ons of steel.Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 5,000 additional gallons of drinking water at point B is (Less, Equal, Or Greater Than) the opportunity cost of 5,000 additional gallons of drinking water at point A. This reflects the (Notion that Countries can gain from trade, Law of Increasing Opportunity Costs, Fact…8. (Shifting Production Possibilities) Determine whether each of the following would cause the national economy’s PPF to shift inward, outward, or not at all: a. An increase in the average length of annual vacations b. An increase in immigration c. A decrease in average retirement-aged. The migration of skilled workers to other countries9. Draw a PPF curve for the macroeconomy of Germany (a large producer of capital goods). Assume that Germany has an unemployment rate of 7%. (Hint: draw the dashed line assuming a full employment level of 4.5% unemployment rate and consider only consumption and capital goods in the economy.)
- Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. The maximum output combinations of both goods are given in the table below: Combination Shoes ComputersShoes ComputersA 0 1000B 100 900C 200 750D 300 550E 400 300F 500 0 i. Draw the PPF using your knowledge about the shape and slope of PPC.ii. Does the PPF have the expected shape? iii. Explain why your PPF in (a) above depicts that shape.iv. How many computers could society produce if it was willing to do without shoes?v. Why are points outside the frontier unattainable?vi. Identify three ways by which the economy can attain the level of production outside the PPF. vii. What happens to the PPF when technological change overwhelmingly favours the production of computers?viii. What happens to the PPF when the economy discovers an improved technology for producing shoes?Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. The maximum output combinations of both goods are given in the table below: Combination Shoes Computers Shoes Computers A 0 1000 B 100 900 C 200 750 D 300 550 E 400 300 F 500 0 Draw the PPF using your knowledge about the shape and slope of PPC. I Does the PPF have the expected shape? iii. Explain why your PPF in (a) above depicts that shape. How many computers could society produce if it was willing to do without shoes? Why are points outside the frontier unattainable? Identify three ways by which the economy can attain the level of production outside the PPF. vii. What happens…Suppose that a worker in Country A can make either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can make either 18 bananas or 6 tomatoes each year. Country B has 400 workers. What are two possible consumption bundles that Country B could produce? Can you explain how to do the math please? a. (7,200 bananas, 2,400 tomatoes) and (3,600 bananas, 1,200 tomatoes) b. (7,200 bananas, 0 tomatoes) and (4,000 bananas, 1,200 tomatoes) c. (3,600 bananas, 1,200 tomatoes) and (1,800 bananas, 1,600 tomatoes) d. (1,800 bananas, 1,800 tomatoes) and (900 bananas, 2,200 tomatoes) Correct answer is C i need Completely solution. Along with all value how to get
- Why does this PPF have a bowed-out shape? How can the economy increase its production of both tea and snacks? Graph the PPF with and show an increase in its production.Suppose an economyuses two resorces (labor and capital) to produce two goods (wheat and cloth). Captial is relativley more useful in prducing cloth, and labor ir relativley more useful in prducing wheat. If the supply of cpatial falls by 10% and the suppy of labor increases by 10%, how will the PPF for wheat and cloth change?Draw a PPF graph for a farm producing two products (RICE & WHEAT) that illustrates increasing opportunity cost and show: a) Show how this PPF graph will change when a technological progress happens in the production of both products? b) Show how this graph will change when this PPF graph shift inwards? And what could be the reason for this PPF graph to shift inwards?
- Consider an economy with two producers, Sidney and Connor. Each allocates 8 hours per day between the production of chocolate and bananas. Given 8 hours of labour, Sidney can produce 80kg of chocolate or 16kg of bananas. Connor can produce either 2kg of chocolate or 4kg of bananas per hour. B) Introducing Trade i) Suppose production capacity does not change. Do we expect there to be trade between Sidney and Connor? Why or why not? ii) What are the bounds on the price of bananas (in terms of chocolate) if there is trade? In other words, what range must the price of bananas fall within? iii) Assume a price of 4. In other words, 1kg of bananas cost 4kg of chocolate. Explain why trade is likely to make both Sidney and Connor better off in this case.Suppose an economy produces two goods: food and machines. this economy always operates on its productions possibilities frontier. last year it produced 50 units of food and 30 machines. This year and experience a Technological advance and it’s machine making industry. As a result of this year the society wants to produce 55 units of food and 30 machines which of the following statements is true? A) The technological advance reduced the amount of resources needed to produce 30 machines. These resources could be used to produce more food. B) because the technological advance occurred in the machine making industry increases and output can only occur in the machine industry. C) in order to increase food production in these circumstances without reducing machine production the economy must reduce inefficiencies. I need help with understanding this. Assume that Andy and Henry, without trading with each other, will produce and consume the following number of steel bars and ketchup bottles. The Gains from Trade Without trade Person Good Production Consumption Gains from Trade Andy Steel bars 60 60 +35 Btl. Ketchup 60 60 +15 Henry Steel bars 20 20 +5 Btl. Ketchup 20 20 +5 Now, Assume that both Andy and Henry decide to specialize, and then Andy trades 25 steel bars to Henry for 75 Btls. ketchup. This outcome is shown in the table below. Compared to the result without trade, what are the gains from trade that Andy experiences when he and Henry specialize and trade? The Gains from Trade With specialization Person Good Production Consumption Gains from Trade Andy Steel bars 120 95 (keep) +35 Btl. ketchup 0 75 (from Henry) +15 Henry Steel bars 0 25 (from Andy) +5 Btl. ketchup 100 25 (keep) +5
