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- An economy produces two goods ,X and Y .lt uses two means of production, labour and capital. A unit of labour can produce either 1unit of X or 4units of Y (or linear combination of the two).A unit of capital can produce either 4units of X or 1unit of Y (or linear combination of the two)there are 100units of each means of production. (i) Draw the production possibility frontier of the economy when the two goods can only be produced by a mixture of both factors. (ii)What will be the opportunity cost of X if the economy produces 50units of X ? (iii) Given that the production technology is linear ,will the opportunity cost of X remain unchanged when we produce 90units of X ? (iv)Briefly explain the difference between the PPC with a constant opportunity cost and the PPC with an increasing opportunity cost as more output of one good is produced. Use a well labeled diagram to explain your answer?Consider a simple exchange economy with two people: Bob and Jake. Bob and Jake both have 10 hours of time available. They can use thier their time to do one of 2 things: make pancakes or make hamburgers. Bob can make 2 hamburgers in an hour or 1 pancake in an hour. Jake can make 3 pancakes in an hour and 2 hamburgers in an hour. Use this information to answer the following questions: a) Who has absolute advantage in the production of hamburgers? Who has absolute advantage in the production of pancakes? b) Who has comparative advantage in the production of hamburgers? Who has comparative advantage in the production of pancakes? c) Can Bob and Jake both benefit from trade if the terms of trade are one pancake per hamburger? Why or why not?1. Pareto Optimality: В A X2 X, M Private Goods and Services per Year 1.1 From the Production Possibility Curve (PPC) above, explain why any point on PPC, such as points A and B, is “Pareto Efficiency". Briefly explain the concept and its implication. 1.2 Bangkok is about to have a new governor as the election for the governorship of Bangkok will be held on 22 May 2022. The city of Bangkok is locally governed by the Bangkok Metropolitan Administration (BMA), which is also considered a local government of Thailand. People always have different opinions about the proper level of public expenditure. state your own perspective regarding current scale of public sector in Bangkok. Should Bangkok increase or decrease the current budget? Why? Use the PPC below to incorporate in your explanation and reasoning, in order to describe the direction of reallocation you preferred. Provide example projects/measures/policy you would like to see its budget rise (or cut). Government Goods and Services…
- The graph below is Mendork's production possibility curve for the only two goods that it produces-quirks and quarks. Quantity of Quarks 800 700 600 500 400 300 200 100 A 2 4 6 8 10 12 14 16 18 20 Quantity of Quirks Select one: Refer to the graph above to answer this question. If new technology increased the output of quirks by 50%, how many quirks could be produced if 700 quarks were produced? B A. 9 quirks. B. 18 quirks. C. 10 quirks. D. 20 quirks. E. No quirks.Assume an economy produces only two goods ( shoes and computers ) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum. Production in this economy is subjected to the laws of diminishing marginal returns and resources are assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers and vice versa is 1. On the basis of the forgoing assumptions , drawthe economy's production possibility frontier on hindsight of the relevant assumption and why the points outside the frontier unattainable?.11 11. Consider the following economy: There are three goods, legume, tillip and quillip, two consumers (called 1 and 2), and two firms (called x and y). Firm x is owned entirely by consumer 1 and makes tillip out of legume according to the simple linear production technology t :::; 3l . That is, for every unit of legume input, this firm produces three times as many (or less) units of tillip. Firm y is owned entirely by consumer 2 and makes quillip out of legume according to the production technology q = 4l. Each consumer initially owns 5 units of legume. Consumer 1 has utility function u1(t, q) = 6 + .4ln(t) + .6ln(q). Consumer 2 has utility function ui(t, q) = 8 +ln(t) + ln(q). (a) What is the general equilibrium of this economy? Assume that firms take prices as given and are profit maximizers, and consumers take prices as given. When you give prices, normalize…
- Short Answer Assume there are two goods: airplanes (a) and bananas (b). The labor-to-capital ratios are 4 and 8, respectively. The labor-to-capital ratio in the wholeeconomy is 5. What is the fraction of capital (over the total amount of capital in the economy) used in the production of airplanes? Assume there is one good in the economy. The good is produced using a standard Cobb-Douglas production function. Give an intuition for why output price does not affect the capital-to-labor ratio?Farmer Jones and Farmer Smith graze their cattle on the same field. If there are 20 cows grazing in the field each cow produces $4000 of milk. If there are more cows in the field, then each cow produces can eat less grass and the milk production falls. With 30 cows on the field each produces $3000 of milk, with 40 cows each produces $2000 of milk . Cows cost $1000 a piece. Assume that Farmer Jones and farmer Smith can buy either 10 cows or 20 cows, find out the Dominant Strategy of Farmer Jones and express the same in formal language. I want to see all the steps.EM.35 Which of the following is most likely to happen as an economy moves along a production possibility frontier producing more services and fewer goods? Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a marginal costs of producing more services will rise, but allocative efficiency may increase. b marginal costs of producing more services will decrease, but allocative efficiency may increase. c marginal costs of producing more services will rise and allocative efficiency will decrease as a result. d marginal costs of producing more services will decrease and the allocative efficiency will increase as a result.
- The budget constraint model and the production possibilities frontier (PPF) model both illustrate (select ALL that apply): O allocative efficiency O productive effieciency O a curved line to represent both the budget constraint and the PPF the tradeoffs in choosing more of one good at the cost of less of the other O comparative advantage O constraints on what we can have due to scarce resourcesThe table below presents production schedule of apples and bananas in the country of mistania - assume that these are the only two goods that Mistania produces. Each row represents a specific set of apples and bananas that Mistania could produce. Suppose Mistania was currently at Senario C, producing 10 bananas and 80 apples. According to the data in this table, if Mistania wanted to produc 1 more banana, how many fewer apples will it need to produce? Scenario Bananas Apples A 0 100 B 5 90 C 10 80 D 15 70 E 20 60Assume an economy producing only two goods (shoes and computers) with a fixed amount of productive resources and technology and employing all its productive resources to the maximum.Production in this economy is subjected to the law of diminishing marginal returns and resourcesare assumed to be fully optimized. In addition, the cost of sacrificing shoes for computers andvice versa is 1. On the basis of the foregoing assumptions, answer the following questions: What happens to the PPF when the economy discovers an improved technology for producing shoes?