EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Chapter 3, Problem 7IAPA
To determine
Impact on
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A production possibility frontier
corn. The farmer can grow 80 bushels of soybeans or 160 bushels of
corn on each acre of land. The price of soybeans is $13.20 per bushel.
The price of corn is $5.85 per bushel.
A farmer can grow soybeans or
What is the opportunity cost (in dollars) per acre to grow
soybeans? Corn?
Which crop (pick only one) do you think the farmer will produce?
Why?
The following is a table that shows the production possibilities for
Good X and Good Y.
Type of
Production Possibilities
Goods
A
B.
D.
E
X
2
4
6.
8.
Y
30
27
21
12
a.
Show these data graphically on a piece of graph paper.
b. What is the cost of producing 2 units of good X?
c. What is the cost of producing 6 units of good X?
d. What is the cost of increasing the production of good X from 4 to 8 units?
e. What is the cost of moving from combination D to A?
f. Label a point F inside the PPC. What is point F imply?
g. Label a point G outside the PPC. What is point G imply?
h. Label a point H on the PPC. What does point H imply?
i. What does it mean when the combination moves from B to E along the same
PPC?
j. What is the this of PPC. Explain.
45
The following table shows the production possibilities data.
Farmer
Rancher
Table 2-3
Labor Hours Needed to Make
1 Pound of:
Meat
8
4
Potatoes
2
5
Pounds produced in 40
hours:
Meat
5
10
Potatoes
20
8
Refer to Table 2-3. The farmer and the rancher both could benefit if the farmer were to specialize in
a. meat and the rancher were to specialize in potatoes.
O b. potatoes and the rancher were to specialize in meat.
c. neither good and the rancher were to specialize in both goods.
O d. neither good; they cannot both benefit by specialization and trade.
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