The following is a set of hypothetical production possibilities for a nation.?
September 22nd, 2009 by adminCombination Automobiles (thousands) Beef (thousands of tons)
A 0 10
B2 9
C 4 7
D 6 4
E 8 0
a. Plot these production possibilities data. What is the opportunity cost of the first 2,000 automobiles produced?
Between which points is the opportunity cost per thousand automobiles highest?
Between which points is the opportunity cost per thousand tons of beef highest?
b. Label a point F inside the curve. Why is this an inefficient point?
Label a point G outside the curve. Why is this point unattainable? Why are points A through E all efficient points?
c. Does this production possibilities curve reflect the law of increasing opportunity costs? Explain.
d. What assumptions could be changed to shift the production possibilities curve?
Combination would be A, B, C, D, E
Automobiles(thousands) would be 0, 2, 4, 6, 8
Beef (thousands) would be 10, 9, 7, 4, 0
Sorry for the confusion
Can you help me with my economics homework?
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September 22nd, 2009 at 2:37 pm
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September 22nd, 2009 at 3:24 pm
I would reckon you, to go through the relevant study materials since this is the initial parts of your economics syllabus.
Production possibility frontier/ curve does help you realize the opportunity cost of producing one product compared to another, it could be a consumer good or a capital good. This curve represents a mere production possibility between a durable and a consumer good, FMCG–fast moving consumer good.
At the given points, it is necessary to go through the curve in determining the answers for your question (and this means that you have to do your ground work on curves!!!–Humor).
Answers:
a)
i) 1000 units of beef
ii) 8000 units of automobiles gives no provision for a single unit of beef
iii) 10000 units of beef gives none for automobiles
b)
i) Inefficient, since the curve depicts the maximum potential of the factors of economy. These factors once utilized efficiently it would be a possibility to attain any point in the curve, giving the opportunity to the ideal market or government to decide the level of each outputs. This inefficiency means that scarce resources are underused, or wasted.
ii) Since, the maximum output is depicted by the curve, and the depiction is determined by the scarce resources. The allocation is at the maximum possible level once it reaches the curve. The curve could move outwards from the origin if certain changes occur, for instance technological improvements, more productive labour factor.
iii) Since the allocation of scarce resources are done at the maximum potential.
c) It does. explained above.
d) Discussed above.
eg: technological improvements, increased labour efficiency.