Question

Section 1 a) The Shire produces two goods-taters and pipeweed. If all resources are used to produce taters. 1,000 tons per day can be produced. If all resources are used to produce pipeweed (a unique plant used for smoking in pipes and producing great smoke rings), 100 barrels per day can be produced. Draw the shire's PPF for taters and pipeweed. Show the slope of the PPF. Calculate costs for both taters and pipeweed. Draw a point that is unattainable (label it). Draw a point that is inefficient (label it). Draw a point that is efficient (label it). Page 1 of 9 5/23/2018 "Quotes from The Lord of the Rings or The Hobbit by JRR Tolkien. Nothing written in italics applies to the questions--it's there just for Tolkien fun Go forth and read!!! b) Lady Galadriel the Elf makes magic soil available which increases the production of both taters and pipeweed by 50 percent. Draw the new PPF for the Shire. Show the slope of the PPF. Calculate the new opportunity costs for both taters and pipeweed. Make your changes from the prior question. c) Gandalf the wizard enjoys smoking pipeweed so much he puts a spell on the tobacco plants so that they double in size and produce twice as much. Draw the new PPF for the Shire. Show the slope of the PPF. Calculate the new opportunity costs for both taters and pipeweed. Make your changes from the prior question. d) Saruman's Uruk-Hai invade the Shire and destroy half the arable land. The uruks are finally driven out of the Shire by the very large (for hobbits) Meriadoc Brandybuck and Peregrin Took. Draw the new PPF for the Shire. Show the slope of the PPF. Calculate the new opportunity costs for both taters and pipeweed. Make your changes from the prior question.

Answer 1

Pipewogel 100+ 1000 Taters opportunity cost for taters 1000 taters = 100 pipewood I taters = 100 pipewood 1000 OC for laters opportunitity oil for 100 pipe wood = I pipewood - pipewood 1000 taters 1000 daters I oc for pipewood = 10 slo stopa y por f Ripewood estas en el me ies achete dio Tatens 1 6-0 1000

..A is is the the w unattainable point as it w outside the PPF • B is inefficient pour the PPF and efficiency by more of prody inefficient point as it is insic and efficiency can be acheired more of production as enough. a • resources are available. c is the efficient point on the PPF aviue. as it lies and o As production of both tators pipewood r by 50% So taters production is = 1500 Pipewood production is – 150 Pro PPF will shift awwards U Pipewood, 150 100 1000 1500 Taletes

New slope of PPF = 1500 150 - 10 Slope will not cchange in the and pipewood porcentage - change beoz production increased by both the of tatoes, same opportunity cost for 1500 tatens I tators tators = 150 = 150 1500 pipewood pipewood - 7 10c of tators oc for tolus 1500 pipewood 150 pipewoed = pipewood & 1500 taters 150 - 10 Oc of pipewood اور

(C) Now peu doubles ml ed con of pipeweed e preoddeed so pipewood now pecodaces 200 barrels. But the production of tatous same ie 1000 tons. us on Pipe weed 200 100 100 Taters 1000 Slope of ppf 4 PPF = 200 1000 – 200 oc for tators 1000 taters = 200 pipeweed I taters - 2000 pipewend Toc for taters = Similarly, 200 pipeweed - 1000 laters Oc for piperweed - 1000 laters oc for pipeweed=51

ed) As now, half of the land is destroyed so production of both taters and pipeweld will be decrease by half New production of tators = 500 " " of pipeweed = 50 Die Taters inward due to Production loss in Slope 500 000 were will shift resources. of ppf = 50 10 the Slope remains goods & by same same bcoz bath porcentage 50 pipeweed 5 pipeeved Oc for taters 500 taters = 1 taters - Toc for plater to 50 pipeweed - 500 laters pipewed 500 tate loc of pipewead = 5