Essentials of Economics
11th Edition
ISBN: 9781260520910
Author: SCHILLER, Bradley
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 1, Problem 1P
To determine
(a)
To find: The point at which Iceland is producing.
To determine
(b)
To find: The level of sacrifice of consumer output by Iceland.
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What is the opportunity cost of increasing missle production fromm 50
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The idea that an action should be undertaken if and only if the benefits exceed the costs is known as the concept of Oeconomic efficiency. O public welfare maximization. marginal comparative advantage. O monetary construction of values.
"Only answer c-d ones"
(a) Calculate the opportunity cost of producing one additional unit of good x in terms of units of good y in Home and Foreign.
The opportunity cost of producing one additional unit of good x in Home or foreign is the amount of good y that must be given up to produce it.
At Home, one worker can produce 2 units of good x or 1 unit of good y. Thus, to produce one additional unit of good x, half a unit of good y must be given up. The opportunity cost in Home is 0.5 units of good y. In Foreign, one worker can produce 1 unit of good x or 2 units of good y. To produce one additional unit of good x, two units of good y must be given up. The opportunity cost in Foreign is 2 units of good y.
(b) Derive the production possibilities frontier (PPF) for Home and Foreign and plot it in a graph with good x in the horizontal axis and good y in the vertical axis.
To derive the production possibilities frontier (PPF) for Home and Foreign, we use the labor market clearing condition…
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