Question

Table 2.1 Production Possibilities Frontier for the United States Combination A B C D E F G Vaccine doses (millions) Guns 10,000 19,000 24,000 28,000 30,000 31,000 17. According to the information in Table 2.1, what is the opportunity cost of producing the first one million vaccines? (a) 1,000 guns (b) 30,000 guns (e) 31,000 guns (d) one million vaccines (e) five million vaccines 19. In Table 2.1, opportunity costs (a) Increase as more vaccines are produced (b) A reconstanta mare vaccines are produced (c) Decee more vaccines are produced (d) Art constant more andre produced (6) Dece m ore guns are produced 19. Choosing to produce more capital goods today allows an economy (a) To shift its production possibilities frontier to the right at a more rapid pace (6) To curb inflation by slowing economic growth (0) To maintain full employment today at the cost of economic growth in the future (d) To shift its production possibilities frontier to the left (c) To avoid opportunity costs with its production decisions in the present 26 Productive efficiency requires that a nation produce () at a point outside its production possibilities frontier (b) at a certain point on its production possibilities frontier (c) at any point on its production possibilities frontier (d) at a point inside its production possibilities fronti (e) the most capital goods possible 11 Triwo countries agree to specialised trade based on comparative advantags, which of the following is most likely to be TRUE? (a) Both of the countries will consume outside their respective production possibilities curves (b) One of the countries will end up receiving all of the gains from trade (e) One of the countries will both consume and produce on its production possibilities Curve () Only one of the countries will produce on and consume outside its production possibilities curve, 22 (A) (b) c) (d) In our simple trade model, having a comparative advantage in a product implies that a country will specialize completely as the product with the highest opportunity cost Special completely in the product with the lowel opportunity cost specialize completely in the product where total output is lower per worker hour. Specialize completely in the product where total output is greater per worker-hour.

Answer 1

ans 17

a) 1000 guns

in order to produce first 1 million of vaccine , US needs to scarifice 1000 guns , so oppurtunity cost of first 1 million vaccine is equal to 1000 guns

ans 18

increase as more vaccines are produced

oppurtunity cost of first 1 million vaccine = 1000 guns

oppurtunity cost of second 1 million vaccine = 2000 guns

oppurtunity cost of third 1 million vaccine = 4000 guns.....so on

so oppotunity cost increases as we go on producing more of vaccines

ans 19

a) to shift its production possibilty frontier to the right at a more rapid pace

when capital goods are produced , capacity to produce will increase and Production possibilty frontier will shift to right

ans 20

c) at any point on its production possibilty frontier

because at points on PPF, country is utilizing all resources available fully

ans 21

a) both of the countries will consume outside their respective production possibility frontiers

both countries will produce at their PPFs but consume outside PPFs

ans 22

b) specialized completely in the product with lowest opportunity cost

country will specialise , produce and export good with lowest opportunity cost and import good with higher opportunity cost