Probelm 7 part c

Probelm 7 part c - if the economy was at A then we gain 50...

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and calculate the marginal opportunity cost of each combination. Combination Health Care All Other Goods Marginal OMarginal Oppurtunity Cost of HeOf All Other Goods A 0 100 B 25 90 3.6 C 50 70 0.71 D 75 40 E 100 0 COMBINATION A 0 100 - - B 25 90 0.8 1.25 C 50 70 0.8 1.25 D 75 40 1.2 0.83 E 100 0 1.6 0.63 a. Using the Information below Plot the PPC of a nation HEALTH CARE ALL OTHER GOODS MARGIN AL OPPORT UNITY COST OF HEALTH CARE MARGIN AL OPPORT UNITY COST OF ALL OTHER GOODS
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Combination Health Care All Other Goods A 0 100 B 25 90 C 50 70 D 75 40 E 100 0 opportunity cost Is defined as the cost of foregone alternatives. so ifC is being produced, the opp cost depends on the point ofproduction before C If theeconomy was at B opp cost is 20 units of all other goods as we have given up 20 units of all go therefore the opp cost of 1 unit of health care is 20/25=.8 units of other goods.
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Unformatted text preview: if the economy was at A then we gain 50 heath by giving up 30 of all other goods. So opp cost of 1 u if we are at D and nove to C we gain 30 of othergoods and loose 25 of health, so the opp cost of oth b. What is the opportunity cost of combination C? oods for 25 more of health care. unit of health = 30/50=.6 her goods is 25/30=.666 c. Plot the PPC, and then determine which nation has the comparative advantage in which activity. Show whether the two nations can gain from specialization and trade. 2 4 2 4 6 8 10 12 P Information Needed & Used To Create PPC Combination All Other Goods Health Care A 50 B 40 20 C 25 40 D 5 60 E 65 6 8 10 Production Possibility Curve 12...
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This note was uploaded on 08/04/2011 for the course ECN 601 taught by Professor Professor during the Spring '10 term at Grand Canyon.

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Probelm 7 part c - if the economy was at A then we gain 50...

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