Principles of Macroeconomics, Student Value Edition (12th Edition)
12th Edition
ISBN: 9780134079530
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 2, Problem 1.13P
To determine
The
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Suppose a production possibilities frontier includes the following combinations:
Cars
Washing Machines
0
1,000
100
600
200
0
What is the cost of producing an additional washing machine when 50 cars are being produced? When 150 cars are being produced? What do your answers tell you about opportunity costs?
Explain why the slope of the production possibilities curve becomes steeper as we move along the horizontal axis.
The nation of Routarou is able to produce turnips and potatoes in combinations represented by the data in the following table. Each number represents thousands of bushels.
Potatoes
Turnips
0
100
10
90
20
70
30
40
40
0
Plot this data on a production possibilities graph and explain why the data shows that Routarou experiences increasing opportunity costs. Would the curve shift inward or outward? Why? Please explain further.
Chapter 2 Solutions
Principles of Macroeconomics, Student Value Edition (12th Edition)
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- Suppose a nation has a total of 12 units of labor, which can be used to produce either guns or butter. One gun takes 6 units of labor to produce and 1 butter takes 2 units of labor to produce. Create a graph to calculate the opportunity cost.arrow_forwardA country, Frankland, produces only two products, cars and trucks. Currently, Frankland is producing on the curve, producing an even amount of cars and trucks. Define what a production possibilities curve is and is used for, and explain what happens when a new technology is adopted by the country of Frankland and the nation is able to increase production because of the increased productivity. You must use complete sentence to answer this question.arrow_forwardWhat do you mean by the production possibilities of an economyarrow_forward
- Using your own words, describe the law of increasing opportunity costs. Be sure to explain why this phenomenon occurs and how it helps to contribute to the shape of the production possibilities frontier.arrow_forwardConsider the following production possibilities table that shows different combinations of two goods that can be produced with given resources: Shirts Corn A 0 20 B 10 15 C 20 10 D 30 5 E 40 0 Based on the table, which is true? Group of answer choices Opportunity cost is increasing Opportunity cost is constantarrow_forwardRefer to Figure 3-8. If the production possibilities frontiers shown are each for one day of production, then which of the following combinations of coffee and soybeans could Chile and Colombia together make in a given day?arrow_forward
- If Yucatan produces 200 pounds of food per month, it must produce 5050 gallons of sunscreen to achieve production efficiency. Part 3 The opportunity cost of 1 pound of food is enter your response here gallons of sunscreen. The opportunity cost of 1 gallon of sunscreen is enter your response here pounds of food.arrow_forwardQ3. Home has 1,200 units of labor available. It can produce two goods, apples and bananas. The unit labor requirement in apple production is 3, while in banana production it is 2. a. Draw Home's production possibility frontier. Label the curve PPF. (Clearly show the maximum amount of the two goods that can be produced on your graph) b. What is the opportunity cost of apples in terms of bananas? (Enter your response rounded to one decimal place.) c. In the absence of trade, what would the price of apples in terms of bananas be? There is now also another country, Foreign, with a labor force (L) of 800. Foreign's unit labor requirement in apple production is 5, while in banana production it is 1. d. Derive the equation for Foreign's production possibility frontier. e. Graph Foreign’s production possibility frontier.arrow_forwardDoes this production possibilities curve show increasing opportunity costs? Explainarrow_forward
- Explain how each of the following situations would affect a nation’s production possibilities curve (i) The nation passes a law requiring all employers to give the employees 16 weeks paid vacation each year. Prior to these law employers were not legally required to give employees any paid vacation time What happens to PPF Explanationarrow_forwardSuppose a production possibilities frontier includes the following combinations: Cars Washing Machines 0 1,000 100 600 200 0 Graph the PPF, assuming that it has no curved segments. What is the cost of producing an additional car when 50 cars are being produced? What is the cost of producing an additional car when 150 cars are being produced? What is the cost of producing an additional washing machine when 50 cars are being produced? When 150 cars are being produced? What do your answers tell you about opportunity costs?arrow_forwardGraphically show the production possibilities frontier for the nation of Stomboli, using the data given in the following table. Does the principle of increasing costs hold on Stromboli?arrow_forward
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