Suppose Poland produces only cars and trucks. The resources that are used in the production of these two goods are not specialized—that is, the same set of resources is equally useful in producing both trucks and cars. The shape of Poland’s production possibilities frontier (PPF) should reflect the fact that as Poland produces more trucks and fewer cars, the opportunity cost of producing each additional truck___________

Suppose Poland produces only cars and trucks. The resources that are used in the production of these two goods are not specialized—that is, the same set of resources is equally useful in producing both trucks and cars. The shape of Poland’s production possibilities frontier (PPF) should reflect the fact that as Poland produces more trucks and fewer cars, the opportunity cost of producing each additional truck___________

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth

Section: Chapter Questions

Problem 8SQ

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Review the numbers for Canada and Venezuela from Table 33.12 which describes how many barrels of oil and tons of lumber the workers can produce. Use these numbers to answer the rest of this question. Draw a production possibilities frontier for each country. Assume there are 100 workers in each country. Canadians and Venezuelans desire both oil and lumber. Canadians want at least 2,000 tons of lumber. Mark a point on their production possibilities where they can get at least 3,000 tons. Assume that the Canadians specialize completely because they figured out they have a comparative advantage in lumber. They are willing to give up 1,000 tons of lumber. How much oil should they ask for in return for this lumber to be as well off as they were with no trade? How much should they ask for if they want to gain from trading with Venezuela? Note: We can think of this ask as the relative price or trade price of lumber. Is the Canadian ask you identified in (b) also beneficial for Venezuelans? Use the production possibilities frontier graph for Venezuela to show that Venezuelans can gain from trade.
Suppose the economy initially produces 15,000 gallons of drinking water and 400,000 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 tons of steel. Suppose, instead, that the economy currently produces 336,000 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 tons 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 the opportunity
Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve: A new technique improves the efficiency of extracting copper from ore.
(Rachel or Susan) has an absolute advantage in the production of corn, and (Rachel or Susan) has an absolute advantage in the production of rye. Raphael's opportunity cost of producing 1 bushel of rye is (BLANK) bushels of corn, whereas Susan's opportunity cost of producing 1 bushel of rye is (BLANK) bushels of corn. Because Raphael has a (higher or lower) opportunity cost of producing rye than Susan, (Rachel or Susan) has a comparative advantage in the production of rye, and (Rachel or Susan) has a comparative advantage in the production of corn.
The U.S. and Mexico both produce vehicles and tons of plastic, which are sold for the same price in both countries. Suppose that with one unit of labor and one unit of capital, the U.S. can produce either 20 vehicles or 43 tons of plastic and Mexico can produce either 10 vehicles or 18 tons of plastic. What is the opportunity cost of producing one vehicle (in terms of tons of plastic) for the U.S.?
part C and D needed only Consider the Production Possibility Frontiers of two countries, Australia and Brazil. Assume both have linear PPFs and the two countries both produce the same two goods: fruits and grain. Given its resources, Australia can produce either 2 units of grain per day or 1 unit of fruits; Brazil can produce either 5 units of grain or 4 units of fruits. (You may, for your own use, find it helpful to draw the Production Possibilities Frontiers for each country, though these won't be included in the answers you provide in you online responses.) a. If there were no trade, what would be the local price of fruits in each country, measured in units of grain? b. If trade is allowed, which country will export fruits and which country will export grain (if any)? c. What are the gains from trading a unit of fruit if the international price of fruit is equal to the average of the local prices in the two countries? d. How are the gains from trade distributed? Comment…
Consider production possibilities of goods and services in China, Since 1980, the population of China has grown by over 40%, from just under 1.0 billion to more than 1.4 billion people. In addition, there has been massive investment in both human and physical capital. Given these changes, we can expect that China's production possibilities frontier has shifted and become curved (bowed outward). Answers A - D A.outward; more B.inward, more C.inward; less D.outward, less
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Suppose that Italy and Spain both produce cheese and wine. Italy's opportunity cost of producing a bottle of wine is 3 pounds of cheese. That is, Italy forgoes the production of 3 pounds of cheese when it produces a bottle of wine. Spain's opportunity cost of producing a bottle of wine is 4 pounds of cheese. _________ (options: Neither Italy nor Spain has, Italy has, Both Italy and Spain have, Spain has) a comparative advantage in the production of wine. _________ (options: Neither Italy nor Spain has, Italy has, Both Italy and Spain have, Spain has) a comparative advantage in the production of cheese.
Q32 Consider the Production Possibility Frontiers of two countries, Australia and Brazil. Assume both have linear PPFs and the two countries both produce the same two goods: fruits and grain. Given its resources, Australia can produce either 2 units of grain per day or 1 unit of fruits; Brazil can produce either 5 units of grain or 4 units of fruits. (You may, for your own use, find it helpful to draw the Production Possibilities Frontiers for each country, though these won't be included in the answers you provide in you online responses.) a. If there were no trade, what would be the local price of fruits in each country, measured in units of grain? b. If trade is allowed, which country will export fruits and which country will export grain (if any)? c. What are the gains from trading a unit of fruit if the international price of fruit is equal to the average of the local prices in the two countries? d. How are the gains from trade distributed? Comment on why the benefits…
Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve: A devastating earthquake destroys numerous production facilities.
Q6 The production possibilities curve below applies to an economy, Prospera that produces only ice-cream sodas and industrial robots. What is the opportunity cost of industrial robots in terms of ice cream sodas when Prospera moves from point a to b and b to c? What is the opportunity cost of ice cream sodas in terms of industrial robots when Prospera moves from point e to d and d to c? How a technological improvement in the assembly of industrial robots would affect the production possibilities curve? If industrial robots can be viewed as a capital good, then describe how this economy’s decision to produce more industrial robots will affect its future production possibilities curve? Can Prospera produce 6 industrial robots and 40 ice-cream sodas Why? How would you describe production in Prospera, If 4 industrial robots and 20 ice-cream sodas are produced?