EBK MACROECONOMICS
7th Edition
ISBN: 9780134738970
Author: O'Brien
Publisher: PEARSON CUSTOM PUB.(CONSIGNMENT)
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Question
Chapter 2, Problem 2.2.14PA
To determine
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Elijah and Aneesha are farmers. Each one owns a 14-acre plot of land. The following table shows the amount of maize and squash each farmer can
produce per year on a given acre. Each farmer chooses whether to devote all acres to producing maize or squash or to produce maize on some of the
land and squash on the rest.
Elijah
Aneesha
SQUASH (Pounds)
140
On the following graph, use the blue line (circle symbol) to plot Elijah's production possibilities frontier (PPF), and use the purple line (diamond
symbol) to plot Aneesha's PPF.
126
112
98
84
70
42
28
14
0
Maize
(Pounds per acre)
10
18
0
Squash
(Pounds per acre)
6
70 140 210 280 350 420 490 560 630
MAIZE (Pounds)
700
Elijah's opportunity cost of producing 1 pound of squash is
squash is
pounds of maize. Because Elijah has a
comparative advantage in the production of squash, and
Elijah's PPF
Aneesha's PPF
(?)
Aneesha has an absolute advantage in the production of maize, and Aneesha has an absolute advantage in the production of squash.
2…
Bob and Cho are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of corn and rye each farmer can produce per
year on a given acre. Each farmer chooses whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye on the
rest.
Corn
Rye
(Bushels per acre)
(Bushels per acre)
Bob
10
5
Cho
40
8
On the following graph, use the blue line (circle symbol) to plot Bob's production possibilities frontier (PPF), and use the purple line (diamond symbol)
to plot Cho's PPF.
200
Bob's PPF
180
160
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0+
F4
H
r
F5
M
F7
1
F8
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F9
CI
F10
According to an article on Barrons.com, "Investment firms are starting to use Al (artificial
intelligence] to execute trades [of stocks, bonds, and other financial securities], manage portfolios,
and provide personalized service to their clients." The article notes that other financial firms,
including banks, insurance companies, are using Al to decrease costs and increase the accuracy of
compliance with government regulations, and to "free employees to work on more valuable jobs."
Source: Scott Likens, "How Artificial Intelligence is Already Disrupting Financial Services"
Barrons.com, May 16, 2019.
Does the use of Al increase or decrease labor productivity?
Increase, because the use of Al represents technological advance.
Decrease, because the use of Al increases the stock of capital
Increase, because the use of Al raises investment returns.
O Decrease, because the use of Al reduces the number of work hours in the economy.
Chapter 2 Solutions
EBK MACROECONOMICS
Ch. 2 - Prob. 1TCCh. 2 - Prob. 2TCCh. 2 - Prob. 2.1.1RQCh. 2 - Prob. 2.1.2RQCh. 2 - Prob. 2.1.3RQCh. 2 - Prob. 2.1.4PACh. 2 - Prob. 2.1.5PACh. 2 - Prob. 2.1.6PACh. 2 - Prob. 2.1.7PACh. 2 - Prob. 2.1.8PA
Ch. 2 - Prob. 2.1.9PACh. 2 - Prob. 2.1.10PACh. 2 - Prob. 2.1.11PACh. 2 - Prob. 2.1.12PACh. 2 - Prob. 2.1.13PACh. 2 - Prob. 2.1.14PACh. 2 - Prob. 2.2.1RQCh. 2 - Prob. 2.2.2RQCh. 2 - Prob. 2.2.3PACh. 2 - Prob. 2.2.4PACh. 2 - Prob. 2.2.5PACh. 2 - Prob. 2.2.6PACh. 2 - Prob. 2.2.7PACh. 2 - Prob. 2.2.8PACh. 2 - Prob. 2.2.9PACh. 2 - Prob. 2.2.10PACh. 2 - Prob. 2.2.11PACh. 2 - Prob. 2.2.12PACh. 2 - Prob. 2.2.13PACh. 2 - Prob. 2.2.14PACh. 2 - Prob. 2.2.15PACh. 2 - Prob. 2.3.1RQCh. 2 - Prob. 2.3.2RQCh. 2 - Prob. 2.3.3RQCh. 2 - Prob. 2.3.4RQCh. 2 - Prob. 2.3.5RQCh. 2 - Prob. 2.3.6RQCh. 2 - Prob. 2.3.7PACh. 2 - Prob. 2.3.8PACh. 2 - Prob. 2.3.9PACh. 2 - Prob. 2.3.10PACh. 2 - Prob. 2.3.11PACh. 2 - Prob. 2.3.12PACh. 2 - Prob. 2.3.13PACh. 2 - Prob. 2.3.14PACh. 2 - Prob. 2.3.15PACh. 2 - Prob. 2.3.16PA
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