mt1f05

mt1f05 - Answer Key: Essay Questions 1. a) Bobs PPF : b)...

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Unformatted text preview: Answer Key: Essay Questions 1. a) Bobs 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) 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 computers 1,000 5,000 computers 15,000 U.S....
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mt1f05 - Answer Key: Essay Questions 1. a) Bobs PPF : b)...

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