A. Suppose Venezuela produces only 2 goods: beef and oil. If it only produces beef, it can produce 300 million pounds. If it only produces oil, it can produces 50 million barrels. 1. Put beef on the y-axis, and oil on the x-axis. Graph the production possibility frontier of Venezuela. 2. What is the opportunity cost of a pound of beef and what is the opportunity cost of a barrel of oil? 3. Derive the equation of the PPF line you just drew. What does the value of the slope mean intuitively?
A. Suppose Venezuela produces only 2 goods: beef and oil. If it only produces beef, it can produce 300 million pounds. If it only produces oil, it can produces 50 million barrels. 1. Put beef on the y-axis, and oil on the x-axis. Graph the production possibility frontier of Venezuela. 2. What is the opportunity cost of a pound of beef and what is the opportunity cost of a barrel of oil? 3. Derive the equation of the PPF line you just drew. What does the value of the slope mean intuitively?
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter3: Interdependence And The Gains Rrom Trade
Section: Chapter Questions
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