Key for Problem set 1 Spring 2007

Key for Problem set 1 Spring 2007 - Economics 100 Key for...

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Economics 100 – Key for Problem Set #1 Spring 2007 Page 1 of 3 1. Consider the following production possibilities for the Swiss and German economies (12 total points: 2 points each) Switzerland Germany Clocks (millions) Chocolates (millions of tons) Clocks (millions) Chocolates (millions of tons) 4 0 12 0 2 5 6 3 0 10 0 6 a. In Switzerland , the opportunity cost of producing one more clock in terms of chocolates is loss in chocolates 10 chocolates 5 2.5 chocolates per one clock gain in clocks 4 clocks 2 Swiss clocks OC == = = b. In Germany , the opportunity cost of producing one more clock in terms of chocolates is loss in chocolates 6 chocolates 1 0.5 chocolates per one clock gain in clocks 12 clocks 2 Germany clocks OC = = c. and d. 0 2 4 6 8 10 12 14 02468 1 0 1 2 chocolates (millions) clocks (millions) Sw iss Production Possibilities German Production Possibilities World Consumption Possibilities Swiss ppc German ppc consumption possibilities
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Page 2 of 3 e. With specialization and international trade, what is the world
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Key for Problem set 1 Spring 2007 - Economics 100 Key for...

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