MACROECONOMICS (LL)
21st Edition
ISBN: 9781260186949
Author: McConnell
Publisher: MCG
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Question
Chapter 1, Problem 5P
Subpart a:
To determine
Production Possibility Frontier and its relevance.
Subpart b:
To determine
Cost of production.
Subpart c:
To determine
Production Possibility Frontier and its relevance.
Subpart d:
To determine
Production Possibility Frontier and its relevance.
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Refer to the following production possibilities table for consumer goods (automobiles) and capital goods (forklifts): a. Show these data graphically. Upon what specific assumptions is this production possibilities curve based? b. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? c. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources? d. Is production at a point outside the production possibilities curve currently possible? Could a future advance in technology allow production beyond the current production possibilities curve? Could international trade allow a country to consume beyond its current production possibilities curve?
Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): If the economy is at point C , what is the cost of one more automobile? Of one more forklift? Explain how the production possibilities curve reflects the law of increasing opportunity costs.
Production possibilities represent the various combinations of two goods that can be produced given (a) fixed resources and (b) fixed technology. All combinations on the production possibilities curve represent the full-utilization of resources. Any point inside the production possibilities curve indicates that resources are under-utilized and more output could be produced with the available resources. Any point outside the production possibilities curve indicates that the available resources can't support the production of the given output combination. At full-utilization of resources, the only way to increase the production of both goods is by shifting the production possibilities curve.
Now consider my backyard garden. I have 100 square feet of allocated space for the vegetable garden which is my fixed resource. for simplicity, I am growing only two vegetables: tomatoes and eggplant. If I grow all tomatoes, I can get a total of 10lbs, and if I grow all eggplant 8lbs. By producing…
Chapter 1 Solutions
MACROECONOMICS (LL)
Ch. 1.2 - Prob. 1QQCh. 1.2 - Prob. 2QQCh. 1.2 - Prob. 3QQCh. 1.2 - Prob. 4QQCh. 1.A - Briefly explain the use of graphs as a way to...Ch. 1.A - Prob. 2ADQCh. 1.A - Prob. 3ADQCh. 1.A - Prob. 1ARQCh. 1.A - Prob. 2RQCh. 1.A - Prob. 2ARQ
Ch. 1.A - Prob. 1APCh. 1.A - Prob. 2APCh. 1.A - Prob. 3APCh. 1.A - Prob. 4APCh. 1.A - Prob. 5APCh. 1.A - Prob. 6APCh. 1.A - Prob. 7PCh. 1.A - Prob. 7APCh. 1.A - Prob. 8PCh. 1.A - Prob. 8APCh. 1 - Prob. 1DQCh. 1 - Prob. 2DQCh. 1 - Prob. 3DQCh. 1 - Prob. 4DQCh. 1 - Prob. 5DQCh. 1 - Prob. 6DQCh. 1 - Prob. 7DQCh. 1 - Prob. 8DQCh. 1 - Prob. 9DQCh. 1 - Prob. 10DQCh. 1 - Prob. 11DQCh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 1PCh. 1 - Prob. 2PCh. 1 - Prob. 3PCh. 1 - Prob. 4PCh. 1 - Prob. 5PCh. 1 - Prob. 6PCh. 1 - Prob. 7PCh. 1 - Prob. 8P
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Similar questions
- Given a production possibilities curve for investment goods and consumption goods, which of the following statements is true? Select one: a. A production point outside the current curve may be attained if the opportunity cost of producing an extra unit of the good measured on the horizontal axis remains constant. b. Acquiring a new technology would push the PPF inwards towards the origin. c. A production point outside the current curve can be efficiently produced with the current level of resources and technology, if the marginal cost of producing one more unit of consumption goods equals the marginal benefit. d. A production point below the PPF suggests that more of both goods can be produced with current resources and technology. e. Shifting resources to make more consumption goods is likely to enable attainment of a production point outside the current curve.arrow_forwardQuestion No 2: Below is a production possibilities table for consumer goods (automobiles) and capital goods (computers). Show these data graphically, what are the assumptions? If economy is producing 3 automobiles and 20 computers, what could you conclude about its use of available resources? Is production at a point outside the production possibilities curve currently possible? Type of Production/ Alternatives Automobiles Computers A 0 30 B 2 27 C 4 21 D 6 12 E 8 0arrow_forwardWhich of the following will shift an economy's production possibilities curve outward? Select one: a. An increase in the unemployment rate. b. A decrease in land, labor, or capital. c. A decrease in the unemployment rate. d. An improvement in technology. Suppose there is a decrease in the price of herbicides and pesticides used in the production of barley. All other things being equal, the equilibrium price of barley will _______, and equilibrium quantity will _______. And suppose barely and hops are complements. After the change in the barley market occurs, all other things being equal, it follows that the equilibrium price of hops will _______, and equilibrium quantity will _______. Select one: a. increase; decrease; increase; decrease b. decrease; increase; decrease; decrease c. decrease; increase; increase; increase d. increase; increase; decrease; increase This past year, a sharp decrease in Japanese demand for U.S. dollars…arrow_forward
- Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): Suppose improvement occurs in the technology of producing forklifts but not in the technology of producing automobiles. Draw the new production possibilities curve. Now assume that a technological advance occurs in producing automobiles but not in producing forklifts. Draw the new production possibilities curve. Now draw a production possibilities curve that reflects technological improvement in the production of both goods.arrow_forwardWhich of the following is true of an economy’s production possibilities curve? a. It shows the combinations of any two resources that can be used to produce an efficient level of output. b. It shows the alternative combinations of goods that can be produced by fully employing scarce resources. c. It must be a straight line when all resources are fully employed. d. It is bowed in (convex to the origin) because of changing levels of technology. e. It is bowed out (concave to the origin) when marginal opportunity costs are constant.arrow_forwardReferring to the table in question 10, suppose improvement occurs in the technology of producing forklifts but not in the technology of producing automobiles. Draw the new production possibilities curve. Now assume that a technological advance occurs in producing automobiles but not in producing forklifts. Draw the new production possibilities curve. Now draw a production possibilities curve that reflflects technological improvement in the production of both goods.arrow_forward
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