2. micro - 2000 3000 4000 5000 6000 7000 8000 9000 0 Plains...

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Mountains & Plains Orchards Plains Other crops 2000 3000 4000 5000 6000 7000 8000 9000 0 1000 2000 3000 4000 5000 6000 7000 Wheat Cannons A Maya Cohen Id 066370065 Exercise 2 Economic Efficiency and the production possibilities frontier 1. a. Although the plains have absolute advantage, over the plains in general agriculture. The plains carry a comparative advantage. By not giving anything up for raising orchards, we lose more by raising the orchards in the plains. b. The most efficient point is point E on the graph. Where we use the entire space in the mountains to plant orchards. Leaving maximum space for other plantations in the plains. c. The production possibilities frontier is the range of efficient production combination. Which are parts of the possible production combination. The points below the production combination curve are possible but inefficient. Whereas the points on the curve are possible and efficient. 2.
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This note was uploaded on 10/25/2009 for the course BUSINESS 772 taught by Professor Sadeh during the Spring '07 term at Interdisciplinary Center Herzliya.

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2. micro - 2000 3000 4000 5000 6000 7000 8000 9000 0 Plains...

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