Suppose that society could produce the following combinations of pizzas and books: Alternative Quantity of pizzas Quantity of books A 50 В 40 10 30 18 20 24 10 28 30 Using graph paper (or a computer program), draw the PPF for pizza and books, being as exact and neat as possible. (Put books on the horizontal axis. Assume that the points above can be connected to define a complete curve.) b. Is it possible or efficient for this society to produce 25 pizzas and 25 books? c. Is it possible or efficient for this society to produce 42 pizzas and 1 book? d. If society is currently producing Alternative B, then the opportunity cost of moving to Alternative A (and getting 10 more pizzas) is, e. Is the opportunity cost of producing pizzas higher or lower moving from Alternative F to E than moving from Alternative B to A? Why is this likely to be so? f. Suppose that the technologies used in producing both pizzas and books improve. Draw one possible new PPF in the graph above that represents the results of this change. Indi- cate the direction of the change that occurs with an arrow. a. books.
Suppose that society could produce the following combinations of pizzas and books: Alternative Quantity of pizzas Quantity of books A 50 В 40 10 30 18 20 24 10 28 30 Using graph paper (or a computer program), draw the PPF for pizza and books, being as exact and neat as possible. (Put books on the horizontal axis. Assume that the points above can be connected to define a complete curve.) b. Is it possible or efficient for this society to produce 25 pizzas and 25 books? c. Is it possible or efficient for this society to produce 42 pizzas and 1 book? d. If society is currently producing Alternative B, then the opportunity cost of moving to Alternative A (and getting 10 more pizzas) is, e. Is the opportunity cost of producing pizzas higher or lower moving from Alternative F to E than moving from Alternative B to A? Why is this likely to be so? f. Suppose that the technologies used in producing both pizzas and books improve. Draw one possible new PPF in the graph above that represents the results of this change. Indi- cate the direction of the change that occurs with an arrow. a. books.
Chapter19: Externalities And Public Goods
Section: Chapter Questions
Problem 19.2P
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