Individuals can make themselves better off by

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Microeconomics
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Chapter 2 / Exercise 8
Microeconomics
Arnold
Expert Verified
Individuals can make themselves better off by specializing in the production of the good in which they have a comparative advantageand then trading some of that good for other goods. Someone who can produce the good at a lower opportunity cost than anotherperson can has a comparative advantage in the production of the good.By specializing in the production of the good for which they have a comparative advantage and then trading it for other goods, peoplecan move beyond their production possibilities frontier.Print Chapter...20 of 243/22/2015 4:53 PM
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Microeconomics
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Chapter 2 / Exercise 8
Microeconomics
Arnold
Expert Verified
Chapter Recap: Questions and ProblemsDescribe how each of the following would affect the U.S. production possibilities frontier: (a) an increase in the number of illegalimmigrants entering the country, (b) a war that takes place on U.S. soil, (c) the discovery of a new oil field, (d) a decrease in theunemployment rate, and (e) a law that requires individuals to enter lines of work for which they are not suited.1.Explain how the following can be represented in a PPF framework: (a) the finiteness of resources implicit in the scarcity condition, (b)choice, (c) opportunity cost, (d) productive efficiency, and (e) unemployed resources.2.What condition must hold for the production possibilities frontier to be bowed outward (concave downward)? To be a straight line?3.Give an example to illustrate each of the following: (a) constant opportunity costs and (b) increasing opportunity costs.4.Why are most production possibilities frontiers for goods bowed outward (concave downward)?5.Within a PPF framework, explain each of the following: (a) a disagreement between a person who favors more domestic welfarespending and one who favors more national defense spending, (b) an increase in the population, and (c) a technological change thatmakes resources less specialized.6.Explain how to derive a production possibilities frontier. For instance, how is the extreme point on the vertical axis identified? How is theextreme point on the horizontal axis identified?7.If the slope of the production possibilities frontier is the same between any two points, what does this imply about costs? Explain youranswer.8.Suppose a nation's PPF shifts inward as its population grows. What happens, on average, to the material standard of living of thepeople? Explain your answer.9.Can a technological advancement in sector X of the economy affect the number of people who work in sector Y of the economy?Explain your answer.10.Use the PPF framework to explain something in your everyday life that was not mentioned in the chapter.11.What exactly allows individuals to consume more if they specialize and trade than if they don't?12.Print Chapter...21 of 243/22/2015 4:53 PM
Chapter Recap: Working with Numbers and Graphs

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