SAMPLE-Problems - floor. If all 24 hours were spent...

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Fall 2010 ECON 1010 SAMPLE: Problems 1. Draw a production possibilities curve based on Table 1, labeling combinations A-F. What is the opportunity cost of increasing missile production (a) From 50 to 100? (b) From 200 to 250? Table 1 Possible Output Combinations Output A B C D E F Missiles 0 50 100 150 200 250 House 100 90 75 55 30 0 The opportunity cost of changing production from 50 to 100 missiles is a reduction in the production of houses from 90 to 75, or a loss of 15 houses. From 200 to 250 results in a loss of 30 houses. A B C D E F 0 20 40 60 80 100 120 0 50 100 150 200 250 300 Quantity of Houses Quantity of Missiles Production Possibilities Curve
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Fall 2010 ECON 1010 2. Assume that it takes 4 hours of labor time to paint a room and 3 hours to sand a
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Unformatted text preview: floor. If all 24 hours were spent painting, how many rooms could be painted by one worker? If a decision were made to sand two floors, how many painted rooms would have to be given up? Illustrate with a production-possibilities curve. If all 24 hours were spent painting, it would be possible to paint a total of six rooms (24/4 = 6). If you wanted to sand two floors, it would take a total of six hours (3 hours per floor x two floors). In these six hours, you could have painted 1-1/2 rooms, thus the opportunity cost of sanding two floors is not paining 1-1/2 rooms. 1 2 3 4 5 6 7 8 9 2 4 6 8 Floors Sanded Rooms Painted Production Possibilities Curve...
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This note was uploaded on 12/05/2011 for the course ECON 2010 taught by Professor Staff during the Fall '08 term at Utah Valley University.

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SAMPLE-Problems - floor. If all 24 hours were spent...

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