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handout-1ans - 1 Handout 1 : Production Possibilities...

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Handout 1 : Production Possibilities (Answer Key) A certain economy only produces two goods, calculators (C) and tea (T). To manufacture these goods, it has three kinds of resources: (1) a fixed quantity of capital, useful only in producing calculators; (2) a fixed quantity of land, useful only in producing tea; and (3) a fixed quantity of labor of 100 men (M) capable of working in either occupation. The table below indicates the amounts of calculators and tea that can be produced when varying amounts of labor work with the specialized resources, calculators and tea. Number of men D M Daily production of calculators D C Number of men D M Daily production of tea 0 0 0 0 10 10 40 40 10 5 20 10 105 65 20 12 30 10 200 95 30 20 40 10 300 100 40 28 50 10 390 90 50 36 60 10 450 60 60 43 70 10 500 50 70 49 80 10 550 50 80 54 90 10 580 30 90 58 100 10 600 20 100 60 1. Draw this economy’s production-possibility curve. (Be careful to label axes. Use of graph paper will enable your graph to be more accurate.) PPF
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This note was uploaded on 10/26/2009 for the course ECON 180-004-20 taught by Professor Bresnock during the Fall '09 term at UCLA.

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handout-1ans - 1 Handout 1 : Production Possibilities...

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