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Recitation 4 - ECO 108 Spring 2008 Daniel Wolman Recitation...

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ECO 108 Spring 2008 Daniel Wolman Recitation 4 Write the answer to your group question neatly on paper with all participating group member names and IDs on top. 1. The following table gives the production possibilities of bushels and logs for a town called Shire. Point Labels Bushels of Food Logs A 800 0 B 750 100 C 700 175 D 650 225 E 500 300 F 375 350 G 210 400 H 0 450 (a) Plot the production possibilities frontier with bushels of food on the y-axis. Label everything. (b) If the economy is producing 680 bushels of food and 150 logs, some resources in the economy are either(not available, unemployed) , or(underemployed, overemployed) . (c) If the economy is to produce 820 bushels of food and 50 logs, there must be (unemployment, economic growth) . Name two ways this might happen. (d) Does this PPF exhibit increasing opportunity costs? Explain. (e) What is the MRT between points B and C? What is the OC of increasing production from 750 bushels of food to 700? What is the relationship between opportunity cost and MRT?
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