16.According to data from the U.S. Department of Agriculture’s National Agricultural Statistics Service, 124 million acres of land in the United States were used for wheat or corn farming in 2004. Of those 124 million acres, farmers used 50 million acres to grow 2.158 billion bushels of wheat and 74 million acres of land to grow 11.807 billion bushels of corn. Suppose that U.S. wheat and corn farming is efficient in production. At that production point, the opportunity cost of producing 1 addi-tional bushel of wheat is 1.7 fewer bushels of corn. However, because farmers have increasing opportunity costs, additional bushels of wheat have an opportunity cost greater than 1.7 bushels of corn. For each of the following production points, decide whether that production point is (i) feasible and efficient in production, (ii) feasible but not efficient in production, (iii) not feasible, or (iv) unclear as to whether or not it is feasible.a.Farmers use 40 million acres of land to produce 1.8 billion bushels of wheat, and they use 60 million acres of land to produce 9 billion bushels of corn. The remaining 24 million acres are left unused.b.From their original production point, farmers transfer 40 million acres of land from corn to wheat production. They now produce 3.158 billion bushels of wheat and 10.107 bushels of corn.c.Farmers reduce their production of wheat to 2 billion bushels and increase their production of corn to 12.044 billion bushels. Along the production possibility frontier, the opportunity cost of going from 11.807 billion bushels of corn to 12.044 billion bushels of corn is 0.666 bushel of wheat per bushel of corn. CHAPTER 2 ECONOMIC MODELS: TRADE-OFFS AND TRADE S-21 GraddyECPS3e_Econ_CH02.indd S-21 GraddyECPS3e_Econ_CH02.indd S-21 4/23/13 8:14 AM 4/23/13 8:14 AM
GraddyECPS3e_Econ_CH02.indd S-22 GraddyECPS3e_Econ_CH02.indd S-22 4/23/13 8:14 AM 4/23/13 8:14 AM
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- Winter '20
- Economics, production possibility frontier, Frivoli, Tivoli