ppc2a - effect (or not effect) Mexico’s production...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Additional Problem 2 : PPCs (Answer Key) In Mexico each unit of a resource can produce either one professional computer (with business and scientific applications) or three computer-game systems. Mexico has 100,000 units of this resource. (a) Draw Mexico’s production possibilities curve for these two products. (b) What is the opportunity cost of one professional computer? One computer- game system? Is the production of professional computers subject to the law of increasing costs? Why or Why not? (1) 3 computer-game systems. (2) 1/3 professional computers. (3) No. Constant opportunity costs. (4) Trade-off always the same. (c) Explain (verbally and graphically) how each of the following events will
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: effect (or not effect) Mexico’s production possibility curve. (1) A previously idle plant that makes only computers is back in operation: Move out to curve from point beneath the curve. (2) A new technique is discovered for producing computer-games with less materials. Pivot out with respect to Computer-Game Systems axis. (3) Because of a declining birthrate, the country’s working-age population shrinks. PPF shifts in. (4) Average educational attainment of the population increases by one year. PPF shifts out. PPF 20,000 40,000 60,000 80,000 100,000 300,000 Computer-game systems Professional Computers...
View Full Document

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.

Ask a homework question - tutors are online