Question

tae Home-Microeconomics We lve in a worid of Snited resouces mted resources d ow and services are produced Nunens mus dece topraduce the goodsand nices wlect o prohuce with eur Fa elh gpods ednet prepare a Productions Possibility Cunve for a Nation ung the fowing Yaxis Xasis Output of Tanks Per Day Output of Trucks Per Day A 2.0 3.0 raph Di 3.9 47 50 dentify the point on the prodacties poswibes cone where the mation is producing 3 trucks and 3.0 tanks per day. #the nation instead choses to produce 1 ss tuck, how many more tanks can the nation produce? dentily the point on the productions possibilities carve whene the naion is producing 2 trucks and 38 tanks per day if the nation instead choses to produce 1 les truck, how many mare tanks can the nation produce is the difference between the addtional tarks that can be produced moving from 3 trucks to 2 trucks compared to moving from 2 trucks to 3 trucks geting larger or smaller? This is referred since the ation has to gve up more of one to as good to get the same amount of the other good and is shown by the production possibilities curve. of the Define opportunity cost Draw supply and demand curves using the following prices jon y ais) and quancity lon x ais) using the following values: gragn Price $8 2 $7 $4 3 Quantity Demanded Quanbity Supplied d 3 7 Supp cune 9 10 7 4 3 identify the Equilbrium Price Show this point on the graph. Assume a 30 % sales tax is levied on all consumption, complete the following table Income Consumption $11.000 Sales Tax %of income Paid in Taxes $10,000 $20,000 $40,000 S80,000 $20,000 $36,000 S60,000

Answer 1

PPF Trucks 4 1 2 3 4 5 A Tanks At point c Marion is producing 3 trucks and 3 tanks. per day. If Nation choose to produce one less truck It will move to a where he could produce 9 more tanks. At this point Nation will produce a trucks and 3.9 tanks 13) Nation is producing 2 trucks and 3:9 tanks at point D. If Nation chooses to produce less truck It will produce (4.7-3.9) of more tonis. At this point (E) Nation will produce 1 truck and 4,7 tanks

C) Difference It means is getting as we smalles. produce move from 3 trucks trucks we to 2 could 9 produce tanks and if we move further from 2 trucks to I trucks we could produce only of to So. difference is getting smaller. This is referred as increasing opportunity Cost of producing extro unit. - Nation has to give up more of one good. to get same amount of other good ps. Shown by the slope or of PPL which is known as Marginal rate of transformation d) . Opportunity Cost is the next best alternative forgone while producing other. It is the amount of output of one commodity ho that has to give up for producing the one additional unit of other good. In above example for producing 3 tanics from two tanks we have to lessen the area production or trucks by one truck. Se for produung one extra tank we have to one truck. This one truck so given up is the opportunity cost of produung one tank. one truga give up