Worksheet PPC

Worksheet PPC - 1. What is the maximum number of schools...

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Worksheet:  Production Possibilities Consider two countries, Alpha and Beta.  Both countries have the same resources, specifically  Land and Labor, and identical abilities to produce the same two goods: Consumer Goods and  Capital Goods. 1.  Draw the PPC for each country reflecting this information, be sure to label everything. 2. One country produces more Capital Goods than the other country.  Show these  production choices. 3. Now consider that one country has developed a technology that improves the ability to  produce Consumer Goods using the same amount of resources.  Show this. Suppose the state needs to build both prisons and schools with a budget limited to $10 million.  Schools cost $1 million each to build and prisons cost $2 million each to build.
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Unformatted text preview: 1. What is the maximum number of schools that can be built? The maximum number of prisons? 2. What is the opportunity cost of building one more prison? 3. Draw the PPC for schools and prisons. 4. Consider that the price of prisons production falls to $1.5 million each. Show this on the PPC. 5. What is the new opportunity cost of producing one more prison? 6. After the prison production cost falls, the production costs for schools rises to $2 million each. Show this on the PPC. 7. The people vote to spend half of the available funds on prisons and half on schools. Draw a PPC for prisons and schools and show these production options....
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