MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Microeconomics, 8th (MindTap Course List)
8th Edition
ISBN: 9781337096560
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 2, Problem 3PA
To determine
Production possibility frontier .
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The first principle of economics is that people face trade-offs. Use a production possibilities frontier to illustrate society’s trade-off between two “goods”—a clean environment and the quantity of industrial output. What do you suppose determines the shape and position of the frontier? Show what happens to the frontier if engineers develop a new way of producing electricity that emits fewer pollutants.
he first principle of economics discussed in Chapter 1 is that people face trade-offs. Use a production possibilities frontier to illustrate society’s trade-off between two “goods”—a clean environment and the quantity of industrial output. What do you suppose determines the shape and position of the frontier? Show what happens to the frontier if engineers develop a new way of producing electricity that emits fewer pollutants.
Please read the following applications and then apply Microeconomics Principles to explain each topic.
If you can please also, add charts and graphs to broaden the explanation as well as add articles and
references. Please list all references and citations if you use any.
Application 1: Scarcity/Incentives
Incentives to Buy Hybrid Vehicles
As stated in the text, "rational people respond to incentives." I find this to be a very true statement. When
the tradeoff or benefit from something else changes, people tend to change their behavior to get that
certain benefit. The Number of hybrid cars that has been increased from 10,000 cars in 2000 to more than
340,000 in 2007, can be explained by this application. Increase in gas prices along with federal subsidy
encouraged people to buy more hybrid cars by reducing cost of driving and cost of hybrid cars. As, Subsidy
was the main reason behind 1/5 the sale of 2007, which is estimated so far. Incentives refer to something
that induces a person…
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MindTap Economics, 1 term (6 months) Printed Access Card for Mankiw's Principles of Microeconomics, 8th (MindTap Course List)
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- Drawing a production possibilities frontier (PPF) Instructions: Consider an economy than only produces two goods - Blueberries and Batteries. Step 1: Draw a production possibilities frontier (PPF) for this economy. Label blueberries on the vertical axis and batteries on the horizontal axis. Label one point that is "efficient", one point that is "inefficient", and one point that is "unattainable". Step 2. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was a technological change that increased the production of batteries only. (Hint: The intercept for blueberries will not change.) Clearly label the new PPF. Step 3. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was a drought that destroyed some of the blueberry harvest. (Hint: The intercept for batteries will not change.) Clearly label the new…arrow_forwardThe production possibilities frontier (PPF) is a simplified economic model that illustrates the different combinations of two products that an economy can produce given the resources it has available. Assume the country of Turkey can produce only apples or oranges and answer each of the following questions A if a flood destroyed 20% of the farmland used to grow apples and oranges, which direction will Turkey's PPF shift /your answer should be "outwards" or "inwards") and why? B. Turkey decides to begin increasing, the production of oranges. Explain the implications of this using the term "opportunity cost" C An advancement in organic pesticide has allowed for less fruit to be damaged by pests. Explain how this change would alter the PPF.arrow_forward
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