# mt1f05 - Answer Key Essay Questions 1 a Bob's PPF Coconuts...

• Notes
• 13

This preview shows pages 1–12. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

This preview has intentionally blurred sections. Sign up to view the full version.

This preview has intentionally blurred sections. Sign up to view the full version.

This preview has intentionally blurred sections. Sign up to view the full version.

Answer Key: Essay Questions 1. a) Bob’s PPF : b) Moving from d to e increases the number of fish caught by 1 and decreases the number of coconuts collected from 32 to 20. Catching 1 additional fish costs 12 coconuts, so the opportunity cost of the fish is 12 coconuts . c) As more fish are caught, the opportunity cost of an additional fish rises . In particular, the first fish has an opportunity cost of only 4 coconuts; the second, 8 coconuts; the third, 10 coconuts; the fourth, 12 coconuts; and the fifth, 20 coconuts. d) This combination is within the PPF and hence is attainable . It is inefficient because Bob could produce more of either or both goods. Bob is not organizing her activities efficiently. e) - Bob finds a ladder that enables him to gather more coconuts ( Figure A ) - A hurricane destroys several coconut trees ( Figure B ) Coconuts collected (per day) Fish caught (per day)

This preview has intentionally blurred sections. Sign up to view the full version.

Figure A Figure B 2. The following table shows how many units of computers and bottles of wine can be produced in one hour in each country: Production in the United States and France Computers (units per hour) Wine (bottles per hour) United States 1/10 1/2 France 1/12 10/8 = 5/4 a) Because France has 12,000 hours of labor and the U.S. has 10,000 hours of labor, the PPF for each country are: b) wine computers 1,000 5,000 wine computers 15,000 U.S. France slope = - 1/5 slope = -1/15 1,000 Coconuts collected Coconuts collected Fish caught 5 54 5 54 Fish caught
Opportunity cost of one computer Opportunity cost of one bottle of wine United States 5 bottles of wine 1/5 computer France 15 bottles of wine

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• Spring '07
• Hou

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern