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Chapter 2: Q 8 (page 45)

Consider a change in the table in Problems 2-6. The student’s set of opportunities is now as follows: Does the PPC illustrate the law of increasing additional cost? What is the opportunity cost to this student for the additional amount of study time on economics required to move her grade from 60 to 70? From 90 to 100?

EconomicsBiology
10040
9050
8060
7070
6080
5090
40100

Short Answer

Expert verified

The PPC does not follow the increasing cost of additionals.

The opportunity cost for moving her grades from 60 to 70 is 10 marks and from 90 to 100 is also 10 marks.

Step by step solution

01

Step 1. Given Information.

The data for the marks in Biology and Economics is,

EconomicsBiology
10040
9050
8060
7070
6080
5090
40100
02

Step 2. The PPC illusration.

The PPC is the various combinations that an economy can operate in a given time period.

The PPC does not follow the increasing cost of additionals as it is a linearr straight line.

03

Step 3. Opportunity Cost

The opportunity cost for moving her grades from 60 to 70 is 10 marks and from 90 to 100 is also 10 marks since a 10 marks increase in Economics will lead to 10 marks downfall in Biology.

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Most popular questions from this chapter

A nation’s residents can allocate their scarce resources either to producing consumer goods or to producing human capital—that is, providing themselves with training and education. The following table displays the production possibilities for this nation:

Production CombinationUnits of Consumer GoodsUnits of Human Capital
A0100
B1097
C2090
D3075
E4055
F5030
G600

(a) Suppose that the nation’s residents currently produce combination A. What is the opportunity cost of increasing the production of consumption goods by 10 units? By 60 units?

(b) Does the law of increasing additional costs hold true for this nation? Why or why not?

Based on the information in Problems 2-15, should you and your roommate specialize in a particular task? Why? And if so, who should specialize in which task? Show how much labor time you save if you choose to “trade” an appropriate task with your roommate as opposed to doing it yourself.

If you receive a ticket to a concert at no charge, what, if anything, is your opportunity cost of attending the concert? How does your opportunity cost change if miserable weather on the night of the concert requires you to leave much earlier for the concert hall and greatly extends the time it takes to get home afterward?

Country A and country B produce the same consumption goods and capital goods and currently have identical production possibilities curves. They also have the same resources at present, and they have access to the same technology.

a. At present, does either country have a comparative advantage in producing capital goods? Consumption goods?

b. Currently, country A has chosen to produce more consumption goods, compared with country B. Other things being equal, which country will experience the larger outward shift of its PPC during the next year?

Using only the concept of comparative advantage, evaluate this statement: “A professor with a Ph.D. in physics should never mow his or her own lawn, because this would fail to take into account the professor's comparative advantage."
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