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2
Chapter
Trade-offs, Comparative
Advantage, and the Market
System
Brief Chapter Summary
2.1 Production Possibilities Frontiers and Opportunity Costs
(pages 38–44)
Learning Objective 1 Use a production possibilities frontier to analyze opportunity costs and
trade-offs.
The economic resources nations have to produce goods and services are scarce.
The time available to households and firms is also scarce. Decision-makers face trade-offs as the
result of scarcity.
The model of the production possibilities frontier is used to analyze the opportunity costs and
trade-offs that individuals, firms, or countries face.
Markets enable buyers and sellers of goods and services to come together to trade.
Entrepreneurs, those who own and operate businesses, are critical to the working of a market
system. They produce goods and services consumers want and decide how these goods and
services should be produced to yield the most profit.
Although government does not restrict how firms produce and sell goods and services in a free
market, it is essential that government protect rights to private property in order for a market
system to work well.
Chapter Outline
Managers Making Choices at BMW
The managers at firms such as BMW (the Bavarian Motor Works) must make decisions regarding the
production and marketing of their products. These decisions include the location and relocation of
manufacturing plants and the production methods used at these plants.
A graph of a linear production possibilities frontier (PPF) is used to illustrate the trade-off BMW faces in
deciding how many roadsters and SUVs it should produce given its limited resources and technology.
A production possibilities frontier is a curve showing the maximum attainable combinations of two
products that may be produced with available resource and current technology.
Opportunity cost is the highest-valued alternative that must be given up to engage in an activity.
than another. Increasing marginal opportunity costs illustrate an important concept: the more resources
already devoted to any activity, the smaller the payoff to devoting additional resources to that activity.
Economic growth will shift a PPF to the right.
C. Economic Growth
Economic growth is the ability of the economy to produce increasing quantities of goods and services.
Economic growth can occur if more resources become available or if a technological advancement makes
resources more productive. Growth may lead to greater increases in production for one good than another.
Trade is the act of buying or selling. One of the great benefits of trade is that it makes it possible for
people to become better off by increasing both their production and their consumption.
Comparative advantage is the ability of an individual, firm, or country to produce a good or service at a
lower opportunity cost than other producers. Comparing the possible combinations of production and
consumption before and after specialization and trade occur proves that trade is mutually beneficial.
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large room originally used for breakfasting parties, continued in
existence for many years, and was not pulled down till 1865.
[Walford, v. 45., ff.; Walpole’s Letters, ii. 212, 23 June, 1750; The
Connoisseur, No. 68, 15 May, 1755; Low Life, 1764; Davis’s
Knightsbridge, 253, ff.; Notes and Queries, 3rd ser. viii. 166; Angelo’s
Picnic (1834), s.v.]
VIEWS.
1. The north front of Jenny’s Whim Bridge and the Old Public
House at the foot of the Bridge, water colour drawing, 1761. Crace,
Cat. p. 311, No. 58.
2. “A west view of Chelsea Bridge” (showing Jenny’s Whim).
Boreman pinx. Lodge sculp. (1761), W. Coll.; Crace, Cat. p. 311, No.
59 (cp. Walford, v. 43).
CROMWELL’S GARDENS,
Afterwards FLORIDA GARDENS, BROMPTON
VIEWS.
There seem to be no views of the Cromwell and Florida Gardens.
There is a view of the garden front of Gloucester Lodge in Jerdan’s
Autobiography (1852), vol. ii. frontispiece.
VI
VIEWS.
A pen and ink sketch of Bermondsey Spa and a portrait of Keyse
were in J. H. Burn’s Collection, and at his sale at Puttick’s were
bought by Mr. Gardner (Notes and Queries, 6th ser. i. 506).
ST. HELENA GARDENS, ROTHERHITHE
These gardens were opened in 1770, and in May 1776 music and
dancing were advertised to take place there in the evenings.
Towards the close of the century the Prince of Wales (George IV.)
and various fashionable people are said to have occasionally visited
the place. St. Helena’s was a good deal frequented as a tea-garden
during the first thirty years of the nineteenth century,[263] chiefly by
the dockyard population of the neighbourhood. In 1831 fireworks and
other entertainments were introduced on the week-day evenings and
the place was for some years styled the Eastern Vauxhall. In 1832
the gardens occupied about five acres and a half, and in this year
the performers advertised included Mr. G. R. Chapman “from the
Adelphi and Astley’s” as organist and musical director, Mrs. Venning,
“from the Nobility’s Concerts,” Miss Wood, “the Infant Prodigy, only
six years of age,” and Miss Taylor who performed “many difficult airs
on that delightful instrument, the Musical Glasses.” Concerts,
dancing and other amusements continued till about 1869 when the
gardens appear to have been closed.
St. Helena Tavern and Tea Gardens.
Rotherhithe.
In 1874, the gardens passed into the hands of Messrs. W. H. and
J. R. Carter who erected an orchestra and a dancing platform, and
provided music and fireworks for an admission of sixpence. The
gardens had fallen into a neglected state, but the walks were once
more well laid out, and the old chestnut trees, the elms and planes
were still standing.
ORCHESTRA AND DANCING-PLATFORM, ST. HELENA GARDENS, circ. 1875.
The gardens ceased to exist in 1881 and were eventually built
over.[264] The site was to the west of Deptford Lower Road, and just
south of Corbett’s Lane and the present St. Helena Road. St.
Katharine’s Church (consecrated 18 October, 1884) in Eugenia Road
(south of St. Helena Road) stands on part of the site.
[Newspaper cuttings, W. Coll.; and see notes.]
VIEWS.
1. The entrance to the St. Helena Tavern and tea-garden, water-
colour drawing, signed R. B. 7 June, 1839 (W. Coll.).
2. Admission ticket in white metal. Size 1·5 inch. Nineteenth
century, circ. 1839? (British Museum). Obverse: View of the entrance
to the tavern and gardens (similar to No. 1); in foreground, two posts
supporting semi-circular board inscribed “St. Helena Tavern and Tea
Gardens. Dinners dress’d”: in exergue, “Rotherhithe.” Reverse:
“Refreshment to the value of sixpence” within floral wreath.
3. Lithographed poster of the St. Helena Gardens, circ. 1875,
showing the orchestra, dancing-platform, and gardens illuminated at
night (W. Coll.).
FINCH’S GROTTO GARDENS
VIEWS.
The only view is one of the second tavern published in Wilkinson’s
Londina Illustrata, 1825:—
“South-east view of the Grotto, now the Goldsmith’s Arms in the
Parish of St. George’s, Southwark.” This shows the inscription: “Here
Herbs did grow.”
CUPER’S GARDENS
Cuper’s Gardens, a notable resort during the first half of the last
century, owe their name and origin to Boyder Cuper, who rented, in
the parish of Lambeth on the south side of the Thames opposite
Somerset House, a narrow strip of meadow land surrounded by
water-courses.
About 1691 or earlier he opened the place as a pleasure garden
with agreeable walks and arbours and some good bowling-greens.
As an old servant of the Howard family he obtained the gift of some
of the statues that had been removed when Arundel House in the
Strand was pulled down. These, though mutilated and headless,
appeared to the proprietor to give classic distinction to his garden,
and they remained there till 1717, when his successor, a John
Cuper, sold these ‘Arundel Marbles’ for £75.[272]
During the first twenty or thirty years of the last century, Cuper’s
was a good deal frequented in the summer-time. A tavern by the
waterside, called The Feathers, was connected with the grounds.
It is not certain that music and dancing were provided at this
period, and the company appears to have consisted chiefly of young
attorneys’ clerks and Fleet Street sempstresses, with a few City
dames, escorted by their husbands’ ’prentices, who (perhaps after
paying a visit to the floating ‘Folly’) sat in the arbours singing,
laughing, and regaling themselves with bottle-ale.[273]
The place was popularly known as Cupid’s Gardens, and is even
thus denominated in maps of the last century. This name is
preserved in the traditional song, once very popular, “’Twas down in
Cupid’s Garden”:—
’Twas down in Cupid’s Garden
For pleasure I did go,
To see the fairest flowers
That in that garden grow:
The first it was the jessamine,
The lily, pink and rose,
And surely they’re the fairest flowers
That in that garden grows.[274]
The ‘Inspector’ of the London Daily Advertiser took his friend the
old Major, to Cupid’s Gardens (as they were still called) on a
pleasant August evening in this year. The Major was delighted with
all he saw. “Now I like this. I am always pleased when I see other
people happy: the folks that are rambling about among the trees
there; the jovial countenances of them delight me ... here’s all the
festivity and all the harmless indulgence of a country wake.”[281]
The country wake element was in evidence late in the evening,
and constables stationed at the gate had occasionally to interfere.
One night, for instance, a pretty young woman, accompanied by a
friend, promenaded the gardens dressed as a man wearing a long
sword. No small sensation was caused in the miscellaneous
company, which included a physician, a templar, a berouged old lady
and her granddaughter, and the sedate wife of a Cheapside fur-
seller. “A spirited young thing with a lively air and smart cock of her
hat” passed by. “Gad,” said she, as she tripped along, “I don’t see
there’s anything in it; give us their cloathes and we shall look as
sharp and as rakish as they do.” “What an air! what a gate! what a
tread the baggage has!” exclaimed another.
But the days of Cuper’s were numbered. In the early part of 1752
the statute-book had been dignified by the addition of 25 George II.,
cap. 36, entitled, “An Act for the better preventing thefts and
robberies and for regulating places of public entertainment and
punishing persons keeping disorderly houses.” By section 2 of this
enactment it was required that every house, room, garden, or other
place kept for public dancing or music, &c., within the cities of
London and Westminster, or twenty miles thereof, should be under a
licence. The Act took effect from December 1, 1752, and the
necessary licence for the season of 1753 was refused to the
management of Cuper’s Gardens. The widow Evans complained
bitterly that she was denied the liberty of opening her gardens, a
misfortune attributed by her to the malicious representations of ill-
meaning persons, but which was really owing, no doubt, to the
circumstance that Cuper’s was degenerating into the place which
Pennant says he remembered as the scene of low dissipation.
Meanwhile Mrs. Evans threw open the grounds (June 1753) as a
tea-garden in connection with the Feathers, and the walks were
“kept in pleasant order.”
In the summer of 1755 entertainments of the old character were
revived, but they were advertised as fifteen private evening concerts
and fireworks, open only to subscribers, a one guinea ticket
admitting two persons. It is to be suspected that the subscription was
mythical, and was a mere device to evade the Act. However, a band
was engaged, and on June 23 loyal visitors to Cuper’s
commemorated the accession of King George to the throne by a
concert and fireworks. Clitherow, who had been the engineer of
Cuper’s fireworks from 1750 (or earlier), was again employed, but
had to publish in the newspapers a lame apology for the failure of
the Engagement on the Water on the night of August 2 (1755), a
failure which he explained was not due to his want of skill but “owing
to part of the machinery for moving the shipping being clogg’d by
some unaccountable accident, and the powder in the ships having
unfortunately got a little damp.”
From 1756–1759 Cuper’s Gardens were again used as the tea-
garden of the Feathers. There was no longer a Band of Musick but
(as the advertisements express it) “there still remains some harmony
from the sweet enchanting sounds of rural warblers.”
The last recorded entertainment at the place was a special
concert given on August 30, 1759 by “a select number of gentlemen
for their own private diversion,” who had “composed an ode alluding
to the late decisive action of Prince Ferdinand.” Any lady or
gentleman inspired by Prussian glory was admitted to this
entertainment on payment of a shilling.
For several years the gardens remained unoccupied, but from
about 1768 three acres of them were leased to the firm of Beaufoy,
the producers of British wines and vinegar. The orchestra, or rather
the edifice used from 1750 for the fireworks, was utilised for the
distillery. Dr. Johnson once passed by the gardens: “Beauclerk, I,
and Langton, and Lady Sydney Beauclerk, mother to our friend,
were one day driving in a coach by Cuper’s Gardens which were
then unoccupied. I, in sport, proposed that Beauclerk, and Langton,
and myself, should take them, and we amused ourselves with
scheming how we should all do our parts. Lady Sydney grew angry
and said, ‘An old man should not put such things in young people’s
heads.’ She had no notion of a joke, sir; had come late into life, and
had a mighty unpliable understanding.”[282]
VIEWS.
1. View of the Savoy, Somerset House, and the water entrance to
Cuper’s Gardens, engraved by W. M. Fellows, 1808, in J. T. Smith’s
Antiquities of Westminster, from a painting (done in 1770, according to
Crace, Cat. 188, No. 219) by Samuel Scott.
2. Woodcuts in Walford, vi. 391, showing entrance to the gardens
(the back entrance) and the “orchestra” during the demolition of the
buildings; cp. ib. 390. Walford also mentions, ib. p. 388, a view
showing the grove, statues, and alcoves, of the gardens.
3. Water-colour drawings of Beaufoys’ and Cuper’s in 1798 and in
1809 (Crace, Cat. 648, Nos. 49, 50).
4. Wilkinson, Lond. Illust. (1825), vol. ii. gives three views, Pl. 155,
view of the Great Room as occupied for Beaufoys’ manufactory, with a
plan of the gardens; Pl. 156, another similar view; Pl. 157, view of the
old Feathers Tavern.