Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 2, Problem 4PA
Sub part (a):
To determine
Production possibility frontierof quantity of car washed and quantity of lawns mowed.
Sub part (b):
To determine
Production possibility frontierof quantity of car washed and quantity of lawns mowed.
Sub part (c):
To determine
Production possibility frontierof quantity of car washed and quantity of lawns mowed.
Sub part (d):
To determine
Production possibility frontierof quantity of car washed and quantity of lawns mowed.
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An economy consists of three workers: Larry, Moe, and Curly. Each works ten hours a day and can produce two services: mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars; and Curly can either mow two lawns or wash one car.
Calculate how much of each service is produced under the following circumstances, which we label A, B, C, and D:
All three spend a their time mowing lawns (A)
All three spend all their time washing cars (B)
All three spend half their time on each activity (C)
Larry spends half his time on each activity, while Moe only washes cars and Curly only mows lawns (D)
Sketch a production possibilities frontier for points A, B, C, and D and explain why the production possibilities frontier has the shape it does.
Are any of the allocations calculated in part (a) inefficient? Explain.
4. An economy consists of three workers: Larry, Moe,and Curly. Each works 10 hours a day and can produce two services: mowing lawns and washing cars.In an hour, Larry can either mow one lawn or washone car; Moe can either mow one lawn or wash twocars; and Curly can either mow two lawns or washone car.a. Calculate how much of each service is producedunder the following circumstances, which welabel A, B, C, and D:r All three spend all their time mowing lawns. (A)r All three spend all their time washing cars. (B)r All three spend half their time on eachactivity. (C)r Larry spends half his time on each activity, whileMoe only washes cars and Curly only mowslawns. (D)b. Graph the production possibilities frontier for thiseconomy. Using your answers to part a, identifypoints A, B, C, and D on your graph.c. Explain why the production possibilities frontierhas the shape it does.d. Are any of the allocations calculated inpart a inefficient? Explain.
An economy consists of three workers: Gilberto, Lorenzo, and Sam. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Gilberto can either mow 2 lawns or wash 1 car; Lorenzo can either mow 1 lawn or wash 1 car; and Sam can either mow 1 lawn or wash 2 cars.
For each of the scenarios listed in the following table, determine how many lawns will be mowed and how many cars will be washed per day and enter these values into the corresponding row.
Scenario
Lawns Mowed
Cars Washed
All three spend all their time mowing lawns. (A)
All three spend all their time washing cars. (B)
All three spend half their time on each activity. (C)
Gilberto spends half his time on each activity, while Lorenzo only washes cars and Sam only mows lawns. (D)
In the following table, identify the opportunity cost of washing cars for each worker.
Worker
Opportunity Cost of Washing Cars
Gilberto…
Chapter 2 Solutions
Essentials of Economics (MindTap Course List)
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Economy can be represented by economic models. One of the models we use to understand economy is a “Circular Flow Diagram”. Sketch a Circular flow model and explain the flow of money and flow of goods and services and factors of production caused by the following activities.
Kaleem pays a shopkeeper Rs.150 for a liter of milk.
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The three fundamental economic questions are what to produce whom to produce and_________?
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Imagine that you just paid $50 for a new pair of jeans. According to the circular flow diagram, what decisions were made concerning the jeans you purchased, and who made decisions about the jeans you bought?
Background information: A worker in the United States and a worker in China can each produce 1,000 pairs of jeans per week. A worker in the United States can produce 50 cell phones in a week, and a worker in China can produce 100 cell phones in a week. Answer the following questions based on this information.Part A: If each country attempted to produce both jeans and cell phones, how many jeans and cell phones could each country produce? What would be the total number of jeans and cell phones produced by the two countries combined? (Show your work.)Part B: Calculate the opportunity cost of producing jeans for each country. (Show your work.)Part C: Calculate the opportunity cost of producing cell phones for each country. (Show your work.)Part D: Determine how many jeans should be…
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