Question

For Questions 20-24: assume it takes 5 cents to make a nickel and 10 cents to make a dime. Also assume that you have 50 cents and all the time in the world. On scratch paper, graph the PPF for nickels and dimes with Qd, the quantity of dimes, on the vertical axis and Qn, the quantity of nickels, on the horizontal axis. OWO For non-negative values of Qd and Qn, what would be the equation of the production possibilities frontier in slope-intercept form? A. Qd = 1/2 Qn Qd = -1/2 Qn + 5 Qd = -2 Qn + 5 Qn = -2 Qd + 10 Qn=2Qd Qd = -1/5 Qn + 50 G. None of the above Where would the point (4,2) lie, in relation to the PPF? A. Inside it. On it. Outside it. Cannot be known from the information given. B.

Answer 1

GN → Cost to make lunit of nickel CD cost to make lunit of dime. C » Total amount of money available to make nickel and Dime. I we have CN=9 Co =10 c =50 So the cauation of production possibility can be uvritten as CN • Qu + C Qp = C 3 5QN+ 1000 = 50 - 6 Plotting (i on the graph gives us, a u el p pod es

> Rearranging is 5QN+ 100 = 50 > 5(Qu +220) =50 » QN+ 2Q1 = so lo = 20 = 10-QN > Q0 = 5-(9) Pn) Slope intercept form. So correct answer is option (B). > Cost to manufacture the bundle (4,2) is = 4 GN + a = 4 x 5 + 2XTO = 20 + 20 (142) < c implies that boint 14,2 dies below the PPE the