Vu Phan Huyen Chi – 11230034 – EBBA 15.

2 – Microeconomic assignment
Ex 1: a)

- A => B = 3/2 = 1,5

- B => C = 6/2 = 3
- C => D = 9/2 = 4,5
- D => E = 12/2 = 6
 The opportunity costs for producing guide missiles increase.
b) At point C
- If one million more cars be produced, point C will move gradually to point D. The
opportunity cost ratio from C to D is 4,5.
=> 1 million more cars will cost 4500 missiles.
- If one thousand more guided missiles be produced, point C will move gradually to
point B. The opportunity ratio from C to B is 1/3
=> 1 thousand more missiles will cost 1/3 million cars.
c) The point G inside the curve of the graph indicate that the amount of these products
that were produced is ineffective with the resources that were provided at that
moment.
d)
- The point H outside the curve shows that it is impossible to produce these amounts
of cars and missiles with the current provided resources.
- Before attaining the point H, more and better inputs or labor resources, higher
technology… must be occurred.
e)

: The original PPF curve

: The PPF curve indicates that there is improvement occurs in the technology of
producing guided missiles but not in the production of cars.
: The PPF curve that reflects technological improvement in the production of both
products.
Ex 2:
a)

E
D

b) Productive efficiency: (using the lowest cost production method)

- If the output of wheat and cloth is 9 tons of wheat and 4000 sets of cloth → this
economy is inefficient. The main reason is this point which represents 2 objects (wheat
and cloths) will meet at a point lying inside the production possibility of frontier.
(Besides, we can produce more goods with that amount of input. For example, the
company produces 9 tons of wheat, the clothes they can produce is 9000 set of that or it
4000 set of cloths are created → the most of wheat that can product is 20 tons → this
way is more effective)
c) With a production complex (20,10 ) which represents a point outside the line (PPF)
means the process of production has exceeded allowed economic resources. On the
other hand, if the company produces 20 tons of wheat, the most set of clothes they
can reach is 4000 sets. Therefore, it is impossible to produce 20 tons of wheat and
10000 set of clothes.
d) The opportunity cost of wheat and set of clothes:
- From A-B the opportunity cost of producing 1000 more sets of clothes is 5/4 tons of
wheat.
→ From B-A the opportunity cost of producing 1 more ton of wheat is 4/5
thousand sets of clothes.
- From B to C the opportunity cost of producing 1000 more sets of clothes is 5/3 tons of
wheat.
→From C to B the opportunity cost of producing 1 more tons of wheat is 3/5
thousand set of clothes
- From C to D the opportunity cost of producing 1000 more sets of clothes is 3 tons of
wheat.
→From D to C the opportunity cost of producing 1 more of wheat is 2/6 = 1/3
thousand set of clothes
- From D to E the opportunity cost of producing 1000 more sets of clothes is 9 tons of
wheat.
→From E to D the opportunity cost of producing 1 more ton of wheat is 1/9000
sets of clothes.