Microeconomics (13th Edition)
13th Edition
ISBN: 9780134744476
Author: Michael Parkin
Publisher: PEARSON
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Question
Chapter 2, Problem 2SPA
(a)
To determine
Identify the value of the
(b)
To determine
Identify the value of the opportunity cost in the production of food crops.
(c)
To determine
Identify the relationship between the opportunity costs of two commodities.
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Suppose that the nation of Costa Rica produces Coffee and Bananas. Below are the possible combinations of Coffee and Bananas that Costa Rica can produce.
Combination
Bananas metric tons (X axis)
Coffee metric tons (Y axis)
A
20,000
0
B
18,000
11,000
C
14,000
20,000
D
8,000
27,000
E
0
30,000
What is the opportunity cost (amount & item) of increasing production from 18,000 tons of bananas to 20,000 tons of bananas ? _________________
What is happening to the opportunity cost as Costa Rica produces more bananas? ______________________
What is the opportunity cost (amount & item) of the first 11,000 tons of coffee produced? ______________________
What is the opportunity cost (amount & item) of increasing production from 11,000 tons of coffee to 20,000 tons of coffee ? ________________
What is the opportunity cost (amount & item )of increasing production from…
Draw a production possibilities frontier (PPF) with missiles on the horizontal axis and butter on the vertical axis, illustrating these options, showing points A – F.
Option missiles butter
A 0 30
B 1 28
C 2 24
D 3 18
E 4 10
F 5 0
Can this country produce 24 units of butter and 4 missiles? Explain. Where would this point lie on the PPF?
What is the trade-off when moving from point A to B?
What is the opportunity cost of increasing missile production from 3-4 units?
what is the opportunity cost of increasing butter production from 18-24 units?
What is the maximum amount of butter that can be produced, if all resources are devoted to butter production?
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I am eight hour day Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight hour day Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
a)what is Andy's opportunity cost of producing one loaf of bread? What is rolfes opportunity cost of producing one loaf of bread
b) who has the comparative advantage in bread production? Who has comparative advantage in butter production?
c)would they both gain from specialization and trade in other each other? Show it through a numerical example
Chapter 2 Solutions
Microeconomics (13th Edition)
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
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