Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Macroeconomics Expert

Topic for Assignment: Production Possibility frontier

Q1. Suppose that a country can manufacture just two things: goods and services. Suppose that over a given period it could produce any of the subsequent combinations:

Units of goods    0    10    20    30    40    50    60    70    80    90    100
Units of service 80    79    77    74    70    65    58    48    35    19      0

(a) Draw country’s production possibility curve.

(b) Supposing that the country is currently manufacturing 40 units of goods and 70 units of services, what is the opportunity cost of manufacturing another 10 units of goods?

(c) Elucidate how the figures exemplify the principle of increasing opportunity cost.

(d) Now suppose that technical progress leads to a 10 per cent raise in the output of goods for any given amount of resources. Draw new production possibility curve.

How has the opportunity cost of producing extra units of services altered?

(a) See the continuous line in Diagram below.

(b) 5 units of services producing another 10 units of goods mean producing a total of 50 units of goods. Therefore, referring to the table,production of services has to be declined from 70 units to 65 units: a sacrifice of 5 units of services.

(c) Each additional 10 units of goods produced involves a raising sacrifice of services.  Thus increasing production of goods from 0 to 10, to 20, to 30, to 40, etc. involves a sacrifice of 1 (80–79), then 2 (70–77), then 3 (77–74), then 4 (74–70), etc. units of services.

Likewise, raising the production of services involves an increasing sacrifice of goods.  This can be seen by starting at the right-hand end of the table and moving to the left.  Smaller and smaller raises in services are obtained for each extra 10 units of goods sacrifice: in other words, for each extra unit of services obtained, more and more goods must be sacrificed.

(d) See the dashed line in Diagram below.  The opportunity cost of producing extra services has risen (by 10 per cent): in other words, each extra unit of services produced involves a sacrifice of 10 per cent more goods than previously.

1476_ppc curve.jpg

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91567

Have any Question? 


Related Questions in Macroeconomics

National hospital is the only employer of nurses in the

National Hospital is the only employer of nurses in the county of Castoria, and it acts as a profit-maximizing monopsonist in the market for nursing labor. The marginal revenue product for nurses is w = 50 2N, where w is ...

What is money how has the monetary system solved many

What is money? How has the monetary system solved many problems the economy faced from barter?

1 1.

1. Describe three factors that help to influence our nation's focus on natural or man-made disasters. 2. Define Mitigation and Preparedness. Compare and contrast the ideas of each, and give examples to highlight your sta ...

Under what elasticity conditions would the following be

Under what elasticity conditions would the following be true? "Increasing the minimum wage will result in a decrease in employment for workers who now earn less than the new minimum wage."

Which of the following curves reflects the idea that in the

Which of the following curves reflects the idea that in the long run, output is determined only by the factors of production and given technology? a. the aggregate demand curve b. the market supply curve c. the long-run ...

In the united stats a three-pound can of coffee costs 5 if

In the United Stats, a three-pound can of coffee costs $5. If the exchange rate is 0.6 euros per dollar and three-pound can of coffee in Belgium costs t 4 euros. What is the real exchange rate? (please show work)

Why are most environmental resources un-priced or

Why are most environmental resources un-priced (or under-priced) and what are the consequences of this? Under what circumstances is it desirable to monetize priceless environmental amenities? Briefly describe three metho ...

Intermediate business economics and the macroeconomyupdated

Intermediate Business Economics and the Macroeconomy UPDATED ESSAY NOTES The essay task is to choose ONE area of economic policy from the list below, regulated by a Singapore government authority as shown. Explain the re ...

Econ assignsuppose that there are two products clothing and

Econ Assign Suppose that there are two products: clothing and soda. Both Brazil and the United States produce each product. Brazil can produce 100,000 units of clothing per year and 50,000 cans of soda. The United States ...

Explain why 76 years ago the rowell-sirois commission

Explain why, 76 years ago, the Rowell-Sirois Commission argued that: "The quality of education and welfare services is no longer a matter of purely provincial and local concern. In Canada today, freedom of movement and e ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen