EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 1.2, Problem 2MQ
To determine
The change in
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Sharing the Surplus
A farmer works on a plot of land owned by a landlord. The figure below illustrates the feasible combinations of free time and bushels of grain.
Why does the farmer’s feasible frontier slope down? Why is it concave?
The farmer’s reservation option is a job that pays 20 bushels of grain for 10 hours of work - this option is labeled Z in the figure. What is the name of the curve running through Z? What does this curve illustrate? Why does it have the shape it has?
If the landlord knows the farmer’s feasible frontier, along with the other curve given in the figure, then they will make the take-it-or-leave-it offer implied by point X in the figure. How does this point relate to the distance between the two curves? How does this point relate to MRS and MRT?
What is the (approximate) surplus in bushels under the landlord’s take-it-or-leave-it offer? How is the surplus split between the farmer and landlord?
Is this allocation efficient? Is it fair? Briefly explain…
An economy will be operating on a point inside of its production possibilities frontier if there is inefficiency in resource allocations.what is meant by inefficiency ?you may find it helpful to use an example in your answer.
What does the slope of a curve between two points have to do with the opportunity cost of producing additional units of good?
Chapter 1 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 1.2 - Prob. 1MQCh. 1.2 - Prob. 2MQCh. 1.3 - Prob. 1TTACh. 1.3 - Prob. 2TTACh. 1.4 - Prob. 1TTACh. 1.4 - Prob. 2TTACh. 1.4 - Prob. 1MQCh. 1.4 - Prob. 2MQCh. 1.4 - Prob. 1.1MQCh. 1.4 - Prob. 1.2MQ
Ch. 1.5 - Prob. 1TTACh. 1.5 - Prob. 2TTACh. 1 - Prob. 1RQCh. 1 - Prob. 2RQCh. 1 - Prob. 3RQCh. 1 - Prob. 4RQCh. 1 - Prob. 5RQCh. 1 - Prob. 6RQCh. 1 - Prob. 7RQCh. 1 - Prob. 8RQCh. 1 - Prob. 9RQCh. 1 - Prob. 10RQCh. 1 - Prob. 1.1PCh. 1 - Prob. 1.2PCh. 1 - Prob. 1.3PCh. 1 - Prob. 1.4PCh. 1 - Prob. 1.5PCh. 1 - Prob. 1.6PCh. 1 - Prob. 1.7PCh. 1 - Prob. 1.8PCh. 1 - Prob. 1.9PCh. 1 - Prob. 1.10P
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- Calculate the opportunity cost of moving from a) Q to R in terms of food b) T to V in terms of foodarrow_forwardA farmer produces both green beans and corn. The farmer must give up 31 bushels of corn to get 7 more bushels of green beans. If the rate of transformation (or tradeoff) between the two goods is constant, then the opportunity cost of 1 bushel of green beans in terms of bushel of corn is? The result should be given to two decimal places in absolute value (e.g if the result is 3.678, write 3.68, if the result is -3, write 3.00.) Your Answer:arrow_forwardThe accompanying graph contains the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- The accompanying graph contains the production possibilities frontier (PPF) for Rubberland. Rubberland only makes two products, rubber band balls and rubber hoses, and on a given day can produce according to the PPF in the graph. Point A on the PPF represents the combination of the two goods Rubberland currently produces. When a new method of rubber processing is discovered, the productivity of all Rubberland's inputs increases. Please shift the PPF to show this change. Assume that Rubberland does not make more rubber band balls than they originally made at point A but still maximize their productive capabilities. Move point A to their new production point. How many more rubber hoses do they now produce per day than before?arrow_forwardGiven the above production possibilities frontier, what is the opportunity cost of moving from point a to point b? C) 3 pairs of socks A) zero D) 2 sweaters B) 3/2 pairs of socks per sweaterarrow_forwardif an economy experiences constant opportunity costs with respect to two goods, then the production possibilities curve between the two goods will be?arrow_forward
- Consider the Production Possibilities Frontier (PPF) where tv s production is defined on x- axis and the production of sandals is defined on the y-axis. If the production plan is on the PPF (in other words is efficient) then the following equation is satisfied (tv s)2+ (sandals)2=25. What is the marginal opportunity cost, in terms of sandals, of producing the fifth (5th) TV?arrow_forwardProduction Possibility Frontier (PPF) - This graph shows the maximum combination of two goods that an economy can produce, given its resources and technology. It is used to illustrate the concept of opportunity cost and to explain the trade-offs that must be made when choosing how to allocate resources. Show this graph with an example please.arrow_forwardWhat is the axiom of consumer choice that implies that consumers spend all their income in order to maximize utility? and Explain the main assumption behind a concave production possibilities frontierarrow_forward
- What is opportunity cost? Explain the Law of Increasing Opportunity Costs with a numerical table and a graph as well.arrow_forwardWhat are Opportunity Costs? How is it different from Cost Benefits? (2 PAGES)arrow_forwardBased on the figure below, which of the following is correct? Bushels of grain 0 0 12- C 16 Angela's hours of free time MRS - MRT 24 Angela's indifference curves Angela's feasible frontier O The MRS is the trade-off between grain and free time that Angela is constrained to make. At a point to the left of Angela's optimal choice, the MRS is smaller than the MRT. At a point to the right of Angela's optimal choice, she is less willing to trade grain for free time than at her optimal choice. O Since all Angela's indifference curves have the same MRS at 16 hours of free time, any choice of grain at 16 hours of free time is optimal.arrow_forward
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