Principles of Microeconomics (7th Edition) (Case/Fair Economics 7e Series)

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Economics 2302 Principles of Microeconomics Professor McFarlin University of Texas at Dallas Problem Set 2 [Note: Problem sets in this class will not be collected or graded.] 1. Consider an economy comprised of Jack and Jill, each of whom is capable of producing some amounts of beer and coffee. In particular, we consider the following production possibilities frontiers (PPF): Jack: B = 15 – 3C Jill: B = 20 – C a. Suppose that under autarky 1 , Jack produces 3B and 4C, while Jill produces 10B and 10C. If Jack and Jill specialize according to the principle of comparative
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Unformatted text preview: advantage, how much of each good will each person produce? What are the gains from specialization? b. Graph the individual PPFs. Label the points chosen under autarky and specialization. c. Graph the social PPF, and label its slopes, end points, and any “kinks.” Label the points chosen under autarky and specialization. Is autarky efficient? Please explain. d. Discuss the shape of the social PPF. Why is it “bowed out”? 1 Definition: Autarky refers to a situation where an individual or country isolates itself from trade, in an attempt to be self-sufficient....
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