HW-1 - Econ 1202 HOMEWORK 1 QUESTION 1: (10 points) The...

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Econ 1202 HOMEWORK – 1 QUESTION 1: (10 points) The prairie dog has always been considered a problem for American cattle ranchers. They dig holes that cattle and horses can step in, and they eat grass necessary for cattle. Recently, ranchers have discovered that there is a demand for prairie dogs as pets. In some areas, prairie dogs can sell for as high as $150 each. Cattlemen are now fencing off prairie dog towns on their land so these towns will not be disturbed by their cattle. We learned about the production possibility frontier, which shows all possible combinations of two goods a country can produce with given technology and inputs, if it fully utilizes all its resources. Now use the concept of a PPF to draw a rancher’s production possibilities frontier showing increasing opportunity cost of cattle production in terms of prairie dog production. Using a separate graph for each situation, show what would happen to the initial production possibilities frontier in each of the following situations: a. The outcome is efficient, with ranchers choosing to produce equal numbers of cattle and prairie dogs. b. As a protest against the government introducing the gray wolf back into the wild in their state,
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HW-1 - Econ 1202 HOMEWORK 1 QUESTION 1: (10 points) The...

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