Group Assignment Presentation 1

Team 8
Member: Nguyen Quang Ha
Ngo Thi Thanh Lan
Le Thanh Nam
Dao Duy Anh
Nguyen Ngoc Minh Chi

Task 1: Use the following production possibilities table for war goods and civilian
goods to answer questions a to e.
Production alternatives
Type of product A B C D E
Cars 0 2 4 6 8
(in millions)
Guided missiles 30 27 21 12 0
(in thousands)

a)

35
A
30
B

25
C
Guided missiles

20

15
D

10

5
E
0
0 1 2 3 4 5 6 7 8 9

Cars (in millions)

- From E to D: To produce 12 thousand more guided missiles, the economy gives
up 2 million cars. Therefore, the opportunity costs of 1 thousand more guided
missiles are 2/12 = 1/6 million cars.
- From D to C: The opportunity costs of 1 thousand more guided missiles are 2/9
million cars.
- From C to B: The opportunity costs of 1 thousand more guided missiles are 2/6 =
1/3 million cars.
- From B to A: The opportunity cost of 1 thousand more guided missiles is 2/3
million cars. => In conclusion, there are increasing opportunity costs to produce
missiles.

b)
If the economy is currently at point C:
- The cost of one million more cars: (21-12)/2 = 4.5 (thousand guided missiles)
- The cost of one thousand more guided missiles: (4-2)/6 = 1/3 (million cars)

c)
Point G is inside the curve of the graph.
=> It shows that the economy's production is inefficient because it doesn’t take
advantage of all resources.

d)
Point H lies outside the PPF curve.
- It indicates that scenario H is impossible or unattainable at present (with fixed
resources)
- The economy can attain the level of production indicated by point H by achieving
the growth of inputs (improving technology, human resources…)
e)
- The PPF represents the technological improvement in the production of guided
missiles but not in the production of cars: the red curve
- The PPF represents the technological improvement in the production of both
products: the green curve

18

16

14

12

10

0
0 10 20 30 40 50 60 70
Task 2: Assume that a simple economy has 2 industries that produce wheat and
cloths. Resources to produce these products are scarce and used effectively. The
following table represents the possible combinations of output between wheat and
cloths that this economy produces in a given year.
Alternatives Output of wheat (tons) Output of cloths (1000 set)
A 25 0
B 20 4
C 15 7
D 9 9
E 0 10

a)

12

E
10
D

8
CLOTHS(1000 SETS)

B
4

A
0
0 5 10 15 20 25 30
WHEAT (TONS)

b)
- The point would lie inside the production possibility frontier, at point G in the
diagram, thus, the production of this economy is ineffective.
- Because if it produces 9 tons of Wheat, the most sets of cloth it can produce is
9000 sets of cloth, or If it produces 4000 sets of cloth, the most amount of wheat it
can produce is 20 tons.
c)
- The point would lie outside the production possibility frontier, at point H in the
diagram, thus, this economy cannot produce 20 tons of wheat and 10 000 sets of
clothes.
- Because the resources are limited, producing 20 tons of Wheat can only produce
4000 sets of cloth. To produce 10,000 sets of cloth, it cannot produce any ton of
wheat.

d)
- The opportunity costs of cloths
❖ From A to B: To produce 4000 set of cloths, the economy gives up 5 tons of
wheat. Therefore, the opportunity costs of 1000 set of cloths are 5/4 tons of wheat.
❖ From B to C: To produce 3000 set of cloths, it gives up 5 tons of wheat.
Therefore, the opportunity costs of 1000 set of cloths are 5/3 tons of wheat.
❖ From C to D: To produce 2000 set of cloths, it gives up 6 tons of wheat.
Therefore, the opportunity costs of 1000 set of cloths are 6/2 = 3 tons of wheat.
❖ From D – E: To produce 1000 set of cloths, it gives up 9 tons of wheat.
Therefore, the opportunity costs of 1000 set of cloths are 9/1 = 9 tons of wheat.
- The opportunity costs of wheat:
❖ From E – D: To produce 9 tons of wheat, it gives up 1000 sets of cloths.
Therefore, the opportunity costs of 1 ton of wheat are 1000/9 set of cloths.
❖ From D to C: To produce 6 tons of wheat, it gives up 2000 set of cloths.
Therefore, the opportunity costs of 1 ton of wheat are 2000/6=1000/3 set of cloths.
❖ From C to B: To produce 5 tons of wheat, it gives up 3000 set of cloths.
Therefore, the opportunity costs of 1 ton of wheat are 3000/5=600 set of cloths.
❖ From B to A: To produce 5 tons of wheat, the economy gives up 4000 set of
cloths. Therefore, the opportunity costs of 1 ton of wheat are 4000/5=800 set of
cloths.