PS1 Answer Key

PS1 Answer Key - Homework Answer Key- Chapter 2 1. a. 240...

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Homework Answer Key- Chapter 2 1. a. 0123456789 1 0 0 20 40 60 80 100 120 140 160 180 200 220 240 Earrings Scarves b. Opportunity cost of increasing the number of scarves produced from 2 to 3 is reducing earring production by 15. c. Doubling of silk prices will reduce the amount of scarves that can be produced, rotating the PPC curve in as shown below. 1 0 0 20 40 60 80 100 120 140 160 180 200 220 240 Scarves d. Innovations that increase production of both goods equally shifts the PPC curve out as shown below.
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0123456789 1 0 1 1 0 20 40 60 80 100 120 140 160 180 200 220 240 260 Earrings Scarves 2. a. The production possibilities are shown in the graph below. 0 1 2 3 4 5 6 7 8 9 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 11000 12000 13000 14000 15000 16000 Cell phones Garments Country A Country B Combined production possibility X L M N b. Country A has a comparative advantage in producing garments while Country B has a comparative advantage in producing cell phones. We know this because for Country A to increase its production of garments by 1,000 a day, it must reduce cell phone production by 400 cell phones a day
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This note was uploaded on 11/04/2009 for the course ECON 201 taught by Professor Williams during the Fall '08 term at UVA.

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PS1 Answer Key - Homework Answer Key- Chapter 2 1. a. 240...

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