Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 2, Problem 19APA
(a)
To determine
Draw the graph of K’s
(b)
To determine
Identify the specialization level in the PPF.
(c)
To determine
Identify the total
(d)
To determine
Identify the value of share of total gains from the trade between K and L.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Elif can produce 6 pies or 30cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1 hour.
On the PPF lines, show what Elif produces and what Ahmet produces when they specialize.
When they specialize and trade, what are the total gains from trade?
If Elif and Ahmet share the total gains equally, which quantities of pies and cakes do they trade?
个
The table shows Frigidia's production possibilities.
Fish
(pounds per month)
300
200
100
0
Draw the four points defined in the table.
Use the four-point line tool to draw the PPF. Label it.
and
and
and
and
Skis
(pairs per month)
0
50
100
150
If Frigidia produces 200 pounds of fish per month, how many pairs of skis must it produce to achieve
production efficiency?
Frigidia must produce pairs of skis to achieve production efficiency.
What is Frigidia's opportunity cost of producing 1 pound of fish and 1 pair of skis?
pairs of
The opportunity cost of 1 pound of fish is
skis
300-
250
200-
Fish (pounds per month)
150-
100-
50-
25
50
75 100 125
Skis (pairs per month)
150
17!
1.)
both have ten hours of time available. The can use their time to do one of two things: make
pancakes or make hamburgers. Bob can make ten hamburgers in an hour or two pancakes in an
hour. Jake can make five pancakes in an hour or one hamburger in an hour.
Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake
a.) Draw Bob and Jake's PPFS with hamburgers on the x-axis. Give equations for both PPFS in
y=mx+b form.
b.) Who has comparative advantage in the production of hamburgers? Who has comparative
advantage in the production of pancakes?
c.) Can Bob and Jake mutually benefit from trade if the terms of trade are one pancake per
hamburger? Why or why not?
Chapter 2 Solutions
Macroeconomics
Ch. 2.1 - Prob. 1RQCh. 2.1 - Prob. 2RQCh. 2.1 - Prob. 3RQCh. 2.1 - Prob. 4RQCh. 2.1 - Prob. 5RQCh. 2.1 - Prob. 6RQCh. 2.2 - Prob. 1RQCh. 2.2 - Prob. 2RQCh. 2.2 - Prob. 3RQCh. 2.2 - Prob. 4RQ
Ch. 2.2 - Prob. 5RQCh. 2.3 - Prob. 1RQCh. 2.3 - Prob. 2RQCh. 2.3 - Prob. 3RQCh. 2.3 - Prob. 4RQCh. 2.3 - Prob. 5RQCh. 2.3 - Prob. 6RQCh. 2.3 - Prob. 7RQCh. 2.4 - Prob. 1RQCh. 2.4 - Prob. 2RQCh. 2.4 - Prob. 3RQCh. 2.4 - Prob. 4RQCh. 2.4 - Prob. 5RQCh. 2.4 - Prob. 6RQCh. 2.4 - Prob. 7RQCh. 2.5 - Prob. 1RQCh. 2.5 - Prob. 2RQCh. 2.5 - Prob. 3RQCh. 2 - Prob. 1SPACh. 2 - Prob. 2SPACh. 2 - Prob. 3SPACh. 2 - Prob. 4SPACh. 2 - Prob. 5SPACh. 2 - Prob. 6SPACh. 2 - Prob. 7SPACh. 2 - Prob. 8SPACh. 2 - Prob. 9SPACh. 2 - Prob. 10SPACh. 2 - Prob. 11APACh. 2 - Prob. 12APACh. 2 - Prob. 13APACh. 2 - Prob. 14APACh. 2 - Prob. 15APACh. 2 - Prob. 16APACh. 2 - Prob. 17APACh. 2 - Prob. 18APACh. 2 - Prob. 19APACh. 2 - Prob. 20APACh. 2 - Prob. 21APACh. 2 - Prob. 22APACh. 2 - Prob. 23APACh. 2 - Prob. 24APACh. 2 - Prob. 25APA
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Suppose there are two bakers in town: Sarah and Amy. Sarah can bake 4 loaves of bread or 8 pies in one day. Amy can bake 6 loaves of bread or 2 pies in one day. Please do the following: (a) Calculate the opportunity cost for both Sarah and Amy for baking pies and bread (b) Draw both Sarah and Amy's PPF curve (c) Who has an absolute advantage in baking bread? In baking pies? (d) Who has a comparative advantage in baking bread? In baking pies? (e) Determine a specific trade (i.e. give me numbers) that would make both Sarah and Amy better off.arrow_forwardElif can produce 6 pies or 30 cakes in 1 hour. Ahmet can produce 10 pies or 20 cakes in 1hour.a) Draw the PPF lines for Elif and Ahmet.b) If each spends 30 minutes of each hour for producing pies and 30 minutes for producing cakes, how many pies and cakes does each produce?c) What is the opportunity cost of producing pies for Elif? What is the opportunity cost of producing pies for Ahmet?d) What is the opportunity cost of producing cakes for Elif? What is the opportunity cost of producing cakes for Ahmet?e) Who has a comparative advantage in producing pies and who has a comparative advantage in producing cakes?f) On the PPF lines, show what Elif produces and what Ahmet produces when they specialize.g) Suppose that they set the exchange price as 1 Pie = 3 Cakes. If they specialize and trade, show an exchange situation that is beneficial for both (compared to the situation you found at part (b))?h) What is the minimum and maximum exchange price they could have determined for an exchange…arrow_forwardHector and Albert are bakers who can make either cakes or pies. Below is a graph showing their production possibilities curves (PPC) for these items. Cake 6. - Albert's PPC Hector's PPC 2 8. Pie Use the information from the above graph to answer the following questions. For opportunity cost please enter numeric answers (ie. 4 or 1/4 not "Four" or "one fourth"), for the question about comparative advantage just type either "Albert" or "Hector" into the submission box. What is Hector's opportunity cost for one cake? What is Albert's opportunity cost for one pie? Who has comparative advantage in making cake? 4-arrow_forward
- 1. Assume you are on an iceland, where you can produce different combinations of coconuts and fish that can be harvested in a given week. The table below shows these combinations. Notice that you can produce either all crabs, all pineapples, or a mix of the two. Coconuts Fish 25 3 15 4 12 5 a) Draw PPF using the information from this table; b) Calculate opportunity cost of coconuts if you decide to increase their harvest from 3 to 5; c) Calculate the slope of the PPF if you increase their harvest from 3 to 5; d) Will you harvest 5 coconuts and 12 fish on any day of the week? Why? e) Will you harvest 5 coconuts and 4 fish on any day of the week? Why?arrow_forwardSuppose you and a friend are stranded on an island and must gather firewood and catch fish to survive. Through experience, you know that if each of you spends an entire day on either activity, the result is given in the following table: You Your Friend Fish 7 8 Firewood 6 bundles 3 bundles You and your friend decide that you should each specialize so that one person catches fish while the other gathers firewood. But who should do which task? a. What is the opportunity cost for you to gather an additional bundle of firewood? fish. The opportunity cost for you to gather an additional bundle of firewood is (Round your answer to two decimal places.) What is your friend's opportunity cost of gathering an extra bundle of firewood? Your friend's opportunity cost of gathering an extra bundle of firewood is fish. (Round your answer to two decimal places.) b. Assuming that you and your friend specialize, what allocation of tasks maximizes total output for your one day of joint effort? To…arrow_forwarda. Can point D be produced? Why?. b. What variable might shift the curve PPC1 to PPC2? What would cause the curves to meet at 40,000 quantities of butter produced? What does point E represent? C. d. Explain the movement from point A to B for the production of these two goods ?arrow_forward
- Carmen and Dennis live on a desolate island. They spend their days fishing or climbing trees to collect coconuts. The following table shows how much of each activity Carmen and Dennis can produce for each hour of work. They each can work up to 12 hours a day. Fish per hour Coconuts per hour Carmen 40 8 Dennis 28 7 On a piece of paper, draw Carmen's PPF with fish on the horizontal (x) axis and coconuts on the vertical (y) axis. Carment's PPF extends from Question Blank 1 of 9 to Question Blank 2 of 9. (Hint: your answer should be in the form of a point (x,y).) Question Blank 3 of 9 has an absolute advantage in the production of fish, and Question Blank 4 of 9 has an absolute advantage in the production of coconuts. Carmen's opportunity cost of producing 1 coconut is Question Blank 5 of 9 fish, while Dennis' opportunity cost of producing 1 coconut is Question Blank 6 of 9 fish. Because Carmen has a Question Blank 7 of 9 opportunity cost of producing…arrow_forwardTom and Abby produce rackets and balls. The graphs show their production possibilities. Tom uses all his resources and produces 2 rackets and 20 balls an hour. Abby uses all her resources and produces 2 rackets and 40 balls an hour. 40- 30- 20- 10- 0+ 0 80- 60- 40- 20- Balls (per hour) 0+ Tom's PPF 1 2 3 4 Rackets (per hour) Balls (per hour) Abby's PPF 3 4 5 1 2 Rackets (per hour) 5 If Tom and Abby specialize and then trade balls and rackets at 15 balls per 1 racket, A. Tom gains 2 rackets while Abby gains 40 balls an hour B. Tom gains 10 balls while Abby gains 1 racket and 15 balls an hour C. Tom gains 1 racket and 15 balls while Abby gains 10 balls an hour D. Tom gains 10 balls and Abby gains 10 balls an hour O E. together they gain 80 balls and 4 rackets an hour o Narrow_forwardProblem 2 Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have ten hours of time available. The can use their time to do one of two things: make pancakes or make hamburgers. Bob can make two hamburgers in an hour or one pancake in an hour. Jake can make three pancakes in an hour or two hamburgers in an hour. Use this information to answer the following questions: a.) Draw Jake and Bob's PPFS, with hamburgers on the x-axis. b.) Give equations for Jake and Bob's PPFS in y = mx+b form, still treating hamburgers as the x variable. c.) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pancakes? d.) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? e.) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hambruger? Why or why not?arrow_forward
- 1. Assume you are stranded on an island with another person. The table below gives the maximum amounts that you and the other person can produce per day, if you devote all your resources to the production of that one good. Further, assume both you and the other person face constant opportunity costs in production. You Other Person Food (lbs.) 30 40 Good Water (gallons) 90 150 a. What is the pattern of absolute advantage? In other words, who has absolute advantage in food production? In water production?arrow_forwardAssume that Natalie and Grace have a garden behind their house and can each pick mushrooms and plums. Each week Natalie can pick a maximum of 20 plums or 100 mushrooms and Grace can pick a maximum of 40 plums or 120 mushrooms. 1. After taking an economics class Natalie goes to her friend Grace and says they can increase production by working together and specializing. Grace says that she would prefer to work alone because she is better at both goods. What type of advantage does Grace have and is she correct in her assessment? 2. Calculate the comparative advantage for both Natalie and Grace for plums and mushrooms 3. Who should specialize in producing mushrooms and who should specialize in producing plums. 4. Assume that when they did not work together, Natalie picked 10 plums and 50 mushrooms and Grace picked 20 plums and 60 mushrooms. When the decision to instead specialize, how many more total plums and mushrooms were they be able to pick? (No trade rate, just look at overall…arrow_forwardConsider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have ten hoursof time available. The can use their time to do one of two things: make pancakes or make hamburgers.Bob can make two hamburgers in an hour or one pancake in an hour. Jake can make three pancakes in anhour or two hamburgers in an hour. Use this information to answer the following questions:a.) Draw Jake and Bob’s PPFs, with hamburgers on the x-axis.b.) Give equations for Jake and Bob’s PPFs in y = mx+b form, still treating hamburgers as the xvariable.c.) Who has absolute advantage in the production of hamburgers? Who has absolute advantage inthe production of pancakes?d.) Who has comparative advantage in the production of hamburgers? Who has comparativeadvantage in the production of pancakes?e.) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hambruger?Whyarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
