Macroeconomics 20th Edition
15th Edition
ISBN: 9781308227689
Author: McConnell
Publisher: Mcgraw-Hill/Create
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Question
Chapter 1, Problem 5RQ
To determine
The production level.
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Specify and explain the typical shapes of marginal-benefit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product? Explain.
Exhibit 2-10 production possibilities curve data
A
B
C
D
E
Capital Goods
0
1
2
3
4
Consumption goods
25
23
19
13
0
Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must:
A) Increase because the production possibility table shows only the maximum efficiency points.
B) Increase because of the law of increasing costs.
C) Decrease because of the law of increasing costs.
D) Decrease because of the finite nature of the resource base.
Microeconomics - Budget Line (BL)
Ethan is a collector of pokemon cards and stickers. He has $56 given by his dad to spend on his collection. The store sells them at $14 per pokemon cards and $7 for the stickers.
1. If Ethan spends all his money on pokemon cards, what is the maximum unit that he can purchase based on the given budget?
2. If Ethan spends all his money on stickers, what is the maximum unit that he can purchase based on the given budget?
3. Show in an illustration where pokemon cards is in the x-axis and y-axis is the sticker.
Chapter 1 Solutions
Macroeconomics 20th Edition
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. 2ARQCh. 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. 7APCh. 1.A - Prob. 7APCh. 1.A - Prob. 8APCh. 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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- Microeconomics - Budget Line (BL) Ethan is a collector of pokemon cards and stickers. He has $56 given by his dad to spend on his collection. The store sells them at $14 per pokemon cards and $7 for the stickers. 1. If Ethan spends all his money on pokemon cards, what is the maximum unit that he can purchase based on the given budget If Ethan spends all his money on stickers, what is the maximum unit that he can purchase based on the given budget? 2. Show in a budget line illustration where pokemon cards is in the x-axis and y-axis is the sticker. 3. Find the slope using the illustrated result.(I only need the answer for number 3.)arrow_forwardA production possibilities table for two products, Consumption goods and Capital goods, is found below. Usual assumptions regarding production possibilities are implied. Consumption goods are measured in tons, and Capital goods are measured per unit. Combination Consumption goods Capital goods A 0 6 B 18 5 C 33 4 D 45 3 E 54 2 F 60 1 G 63 0 1. Sketch a production possibilities curve from the above information. 2. Using the information given in the above schedule, describe the concept of increasing opportunity cost. 3. Suppose the economy is producing at a point inside the PPC. Give at least two reasons why this could occur. What could be done to move the economy to a point on the PPC? 4. “As compared to production combination F, the economy would experience higher growth rates in the future if production combination B is currently chosen.” Comment this statement. 5. Given the…arrow_forward1. Explain the principle of scarcity? 2. Explain the principle of choice? 3. Explain the concept of diminishing returns?arrow_forward
- Below is a table of production possibilities for a company that produces soft drink bottles and juice bottles (in thousands of units per week): Production alternatives production type A B C D E F Set of 8 soft drink bottles 0 4 10 15 19 22 12 juice box 58 56 48 32 16 0 Plot this data on a graph. What specific assumptions are represented by this production possibilities curve? If a firm is at point C, what is the opportunity cost of an additional set of soft drinks? From an extra juice box? If the company characterized in this table produced 7 sets of 8 bottles of soda and 40 cases of 12 juices, what could be concluded about the use of available resources? Is production currently possible at a point outside the production possibilities curve? Explain your answer.arrow_forwardRefer 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?arrow_forwardMonica like to spend 30 dollars weekly on movies and burgers.movie tickets costs 6 dollar each and burger cost 3 dollar each. 1. Is she able to watch 3 movies and have 5 burgers in a week given her budget of 30 dollar? 2. What is monica s opportunity cost of watching a movie?arrow_forward
- Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): a. Show these data graphically. Upon what specifific 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? Explain how the production possibilities curve reflfl ects the law of increasing opportunity costs.c. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 fork lifts, what could you conclude about its use of its available resources?d. What would production at a point outside the production possibilities curve indicate? What must occur before the economy can attain such a level of production?arrow_forward4-Identify the scarcity definition of economics from the following. a. the choices we make because of shortage of resources. b. the distribution of surplus goods to those in need. c. None of these d. ways to reduce wants to remove the problem of scarcity.arrow_forwardSpecify and explain the typical shapes of marginal-benefifit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefifit, should more or fewer resources be allocated to this product? Explain.arrow_forward
- 2. Which of the following is not an assumption that underlies an economy's production possibilities curve? A. fixed income B. fixed resources C. unchanged technology D. fully employed resourcesarrow_forward“How to allocate limited resources to their best use is the very first and fundamental principle that you guys learn in a first course in both economics and finance.” Explain how the concepts and techniques covered in the various topics in this course can help address the issue. [Hint: Think about how NPV, as an investment decision rule, addresses the efficient allocation of limited resources problem. Specifically, why an investment project being “profit-making” may still be value- destroying and result in misallocation of resources?]arrow_forwardEconomics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with ________, the incentives that influence those choices, and the arrangements that coordinate them. plethora realization scarcity profusionarrow_forward
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