Econ Assignment Chapter 2 PDF

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hw econ chapter 2...

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Marcus Poree Ms. Bushat Principles of Economics

a.

Show these data graphically. Upon what specific assumptions is this production possibilities curve based?

Chart Title 35

30

25

Forklifs

20

15

10

5

0

0

1

2

3

4

5

6

7

8

9

Automobile

A: The slope of the graph is -3.75 b.

If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? A: At point C, the cost of producing 1 more automobile would cost 4.5 less forklift, whereas, producing one more forklift, then the production would equal 1/3 less automobile. Length would reflect the opportunity cost more because if the slope is longer than the production is most efficient for producing both goods. c.

If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources? A: This would be an inefficient way of using its resources, because when producing only 3 automobiles, there is still enough resources to make about 24 forklifts. Anything less would not be on the production curve.

d.

Is production at a point outside the production possibilities curve currently possible? Could a future advance in technology allow production beyond the current production possibilities curve? Could international trade allow a country to consume beyond its current production possibilities curve? A: Currently nothing above the production curve is possible, however, if in the future, a more efficient way to produce the automobile or forklift using less resources is possible, then the production curve could increase. International trade probably would not increase the production...