Group

assignment
presentation 1
 Team 1 – micro economics

Yên Đan Uy Lực Ngọc Minh Xuân Lam Thu Thảo

exercise
01
 Car (in millions)

Guided misiles (in thousands)

Throughout the graph, we see the opportunity cost of increasing output of 2

million cars is 3, 6, 9, 12 thousand missiles respectively. In conclusion, there are
an increasing in opportunity cost for the production of guided missiles.
 Alternative
Car (in millions) Guided missiles (in thousands)
s
C 4 21
D 6 12

From C to D, the opportunity cost of producing 2 million more

cars is 9 thousand missiles, so to garner the car production by 1
million, which is half of the rise from C to D, the economy has to
trade off by cut down 9/2 = 4.5 thousand missiles in production.
 Alternative
Car (in millions) Guided missiles (in thousands)
s
B 2 27
C 4 21

The opportunity cost of increasing missiles output from C to B

is 2 million cars. In order to raise the guided missiles production by
1 thousand, which is 1/6 of the gain rate from C to B, the
opportunity cost is 2/6 = 1/3 million cars.
 Car (in millions)

Guided misiles (in thousands)

Point G indicates the output of cars and missiles production are 2

million cars and 12 thousand guided missiles respectively, this means the
economy at this point is inefficient because if it produces 2 million cars,
the most missiles can be produced is 27 thousand, and if it produces 12
thousand guided missiles, the most cars can be produced is 6 million.
 Car (in millions)

Guided misiles (in thousands)

Point H indicates the output of cars and missiles production are

8 million cars and 24 thousand guided missiles respectively, this means
the economic outputs which can only result from growth of the availability
of inputs to transform inputs into outputs, therefore the point H indicates
the impossible outcome with the fixed resource.
 Car (in millions)

Guided misiles (in thousands)

The graph indicates the technology improvement of in 2

alternatives: in only missile production and both products
production
exercise
02
 PRODUCTION POSSIBILITY FRONTIER CURVE

^
Cloths (1000 set)

Cloths (1000
Alternative Wheat (tons)
set)
A 25 0
B 20 4
C 15 7
D 9 9
E 0 10

^
Wheat (tons)

PPF REFLECTS 2 INDUSTRIES WHICH PRODUCE WHEAT AND CLOTHS

 PRODUCTION POSSIBILITY FRONTIER CURVE

Cloths (1000 set)

Cloths (1000
Alternative Wheat (tons)
set)
A 25 0
B 20 4
C 15 7
D 9 9
E 0 10
G 9 4

Wheat (tons)

PPF REFLECTS 2 INDUSTRIES WHICH PRODUCE WHEAT AND CLOTHS

This economy is inefficient

Alternative 1
If it produces 9 tons of Wheat, the most set of cloths it can
produce is 9000 set of cloths.

Alternative 2
If it produces 4000 set of cloths, the most of wheat it can
produce is 20 tons.
 PRODUCTION POSSIBILITY FRONTIER CURVE

Cloths (1000 set)

Cloths (1000
Alternative Wheat (tons)
set)
A 25 0
B 20 4
C 15 7
D 9 9
E 0 10
H 20 10

Wheat (tons)

PPF REFLECTS 2 INDUSTRIES WHICH PRODUCE WHEAT AND CLOTHS

it is impossible, because

Alternative 1
If it produce 20 tons of wheat, the most of cloths it can
produce is 4000 set.

Alternative 2
If it produce 10.000 set of cloths, it can not produce any
tons of wheat.
 Cloths (1000
Alternative Wheat (tons)
set)
A 25 0
B 20 4

From point B to A, the opportunity cost of producing 5 more tons of wheat is 4

thousand set of cloths.
=>The opportunity cost of producing 1 more ton of wheat is 4/5= 0.8
thousand set of cloths.
=> From point A to B the opportunity cost of producing 1000 more set of
cloths is 5/4= 1.25 tons of wheat.
 Cloths (1000
Alternative Wheat (tons)
set)
B 20 4
C 15 7

From point C to B, the opportunity cost of producing 5 more tons of wheat is 3

thousand set of cloths.
=>The opportunity cost of producing 1 more ton of wheat is 3/5 =0.6
thousand set of cloths.
=> From point B to C the opportunity cost of producing 1000 more set of
cloths is 5/3 =1.6 tons of wheat.
 Cloths (1000
Alternative Wheat (tons)
set)
C 15 7
D 9 9

From point D to C, the opportunity cost of producing 6 more tons of wheat is 2

thousand set of cloths.
=>The opportunity cost of producing 1 more ton of wheat is 2/6 =0.3
thousand set of cloths.
=> From point C to D the opportunity cost of producing 1000 more set of
cloths is 3 tons of wheat.
 Cloths (1000
Alternative Wheat (tons)
set)
D 9 9
E 0 10

From point E to D, the opportunity cost of producing 9 more tons of wheat is 1

thousand set of cloths.
=>The opportunity cost of producing 1 more ton of wheat is 1/9 =0.1
thousand set of cloths.
=> From point D to E the opportunity cost of producing 1000 more set of
cloths is 9 tons of wheat.
THANKS
Do you have any questions?