NAME : VIGNESHWARY A/P KOLANDAI NATHAN VC NO. : 991112-08-6372 MATRIX NO. : EV01080645 TUTORIAL 1 CHAPTER 2 : PRODUCTION POSIBILITIES, OPPORTUNITY COST, AND ECONOMIC GROWTH STUDY QUESTIONS AND PROBLEMS Question 6: A. The Opportunity Cost of the first 2,000 Automobiles Produced is 1,000 Beef. Between Point D and E is the opportunity cost per thousand automobiles highest. Between Point A and B is the opportunity cost per thousand beef highest. PRODUCTION POSIBILITY CURVE (PPC) G (UNATTAINABLE) AUTOMOBILES B. Point F inside the curve is inefficient point, because not all the resources fully utilized. Point G outside the curve is unattainable point, because of the nation nowadays is dealing with a level of scarce resources making it impossible to produce goods and services beyond the frontier. Points A to E are efficient points as they lie on the existing PPF and also used all the resources they have to produce goods and services.NAME : VIGNESHWARY A/P KOLANDAI NATHAN VC NO. : 991112-08-6372 MATRIX NO. : EV01080645 C. Yes. As the additional production of Automobiles may incur a greater opportunity cost. D. Quantity of Resources Question 7 : COMBINATION PIES FLOWERBOXES | OPPORTUNITY COST A 30 0 0 B 26 1 4 ie 21 2 5 D 15 3 6 E 8 4 7 F 0 5 8 Question 8 : The Bowed-Out Shape of the Production Possibility Frontier is because of the increasing of opportunity cost of production.52 PART 1 INTRODUCTION To ECONOMICS (CHECKPOINT ANSWER Y What Does a War on Terrorism Really Mean? ‘A “peace dividend” suggests resources are allocated If you said that this phrase represents a movement away from military production and used for greater along the production possibilities curve, YOU ARE nonmilitary production, The war on terrorism. CORRECT. arguably shifts resources in the opposite direction, For an explanation of the correct answers, visit the (©) best option given up as a result of choosing Tucker Web site at www.cengage.com/economics/ an alternative tucker. d. undesirable sacrifice required to purchase a Blige ene eterna Geeta eesti coon by all economies? 4, On a production possibilities curve, the oppor. a. How much to produce? When to produce? tunity cost of good X in terms of good Y is rep- How much does it cost: resented by b. What is the pr Who will produce it? a. the distance to the curve from the vertical Who will consume it? axis What to produce? How to produce it? For b, the distance to the curve from the horizontal @* movement along the curve. Dy Acmlsragalnanscaemanneme rein QR of the above. two exams on the following day has the follow- ing two alternatives: ‘< est fing fh marginal fer han : a. $12.50 per pound. A 95 80 8 a0 0 b. $20 per pound. ¢. $80 per pound. The opportunity cost of receiving a 90, . $100 per pound. ates ten on a Cmutnelec omnes od 6. On a production possibilities curve, a change is represented by how many points on the from economic inefficiency to economic efficiency is obtained by a, movement along the curve. ieee b, movement from a point outside the curve to oe a point on the curve. d. 10 points movement from a point inside the curve to a 3. Opportunity cost is the point on the curve. a. purchase price of a good or service. 4d. a change in the slope of the curve. b. value of leisure time plus out-of-pocket costs. rh 2010 Cengage Lenin. lis Reed My at pil seo sical or prt Due cto, stm il pty itty be epee th Bok ar eC nese deme aay ope net es ame at te reaming Css Leigh et ee oto ine aye fae ie eins egcHAPTER2 PRODUCTION POSSIBILITIES, OPPORTUNITY COST, AND ECONOMIC GROWTH 53 Any point inside the production possibilities curve is a (an) a. efficient point. 6 unfeasible point. inefficient point. maximum output combination. 8, Using a production possibilities curve, unem- ployment is represented by a point located a. near the middle of the curve. b, at the top corner of the curve. ¢. at the bottom corner of the curve. outside the curve. inside the curve. 9. Along a production possibilities curve, an increase in the production of one good can be PED b. A reduction in tax rates of the rich makes the tax system more fair €. Tax rates ought to be raised to finance health care d. All of the above are primarily statements of posit 10. Woah 2p will fall. b. An unemployment rate of 7 percent is a serious problem. If the overall unemployment rate is 7 percent, unemployment rates among African Americans will average 15 percent. 4. Unemployment is a more severe problem than inflation. b. The minimum wage is supported by unions. The minimum wage reduces the number of jobs for less-skilled workers. 4. ‘The minimum wage encourages firms to substitute capital for labor. total income. profits will fall d. unemployment will rise. hpi 208 Cogs Leg gh ered May ped se dope rw at Deb ee gh il ty cet yb pre hem ee cop. el eet ede eel ele eee ere20 PART INTRODUCTION To ECONOMICS Practice Quiz Continued 13. Computer programs, or software, are an P. y pen 2ED example of a. land. labor. capital b. helps explain and predict the relationship none of the above. between variables. 14. Which of the following would nos be classified ©. when expressed as a downward (negatively) eeeugsleemratcd sloping graph implies en inverse relationship a. The Empire State Building, b. A Caterpillar bulldozer. © piloc th above ‘A Macintosh computer. 100 shares of stock in General Motors. yt 210 Cig Leming. A Rigs Rere Mey tb pind me, pa nw rin pts seein ed pty tnt be ep mh Bek eds ren em a een en EY a) ee hr aig gE Ee Lea RTE he EM EN ASS lea ay ee ph ea EE