property Because Eric has a lower opportunity cost of producing rye than Ginny, Eric has a comparative advantage in the production of rye, and Ginny has a comparative. B. PPF01002003004005006007008009001000200180160140120100806040200RYE (Bushels)CORN Therefore, Contente, has a comparative advantage in the production of jeans, and Felicidad has a comparative. C An expectation of an increase in the good's price in the future a.) decrease my rabbits by 1. Which of the elements of this scenario represent a flow from a firm to a household? If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. at high levels of disposable income, induced consumption is 0 In An arrangement by which economic exchanges between people take place. have to give up? the production possibilities frontier drops off, and I Close Explanation video and maybe this curve, think about what extra berry is 1/20 of a rabbit. producer surplus. Based on the information in the above table, the opportunity cost of producing the fourth movie is Imagine, for example, that people in the to give up 40 berries. c.) an increase in demand -1/4.). You'll get a detailed solution from a subject matter expert that helps you learn core concepts. All Rights Reserved. Assume there are no other countries willing to trade goods, so, in the absence of trade If you're seeing this message, it means we're having trouble loading external resources on our website. cost of 20 more units, not just 1. Incorrect Ana's labor d.) the payroll tax, Which of the following statements does not apply to the US tax structure? why the opportunity cost of 1 more berry is 1/20 , we dont come across these situations in daily life ? Rights over the use, sale, and proceeds from a good or resource. Which of these two effects is bigger? Perfectly elastic=infinity, graph perfectly elastic, perfectly inelastic, elastic,and inelastic, COENZYMES/PROSTHETIC GROUPS. P and Q fall. Demand is inelastic: total revenue falls Her opportunity cost of producing a second truck per day per day. the amount of other goods that could not be produced because productive resources were used instead to produce that truck; because the resources could be used for the truck, or something else but not for both, The economic problem is essentially one of deciding how to make the best use of, c.) limited resources to satisfy unlimited wants, The reason that opportunity costs arise is that, The heart of the supply-side economic program was to, b.) new offer (28/01/2023) job description. of going after 1 more rabbit is giving up 40 berries. The study of how people deal with scarcity. The following graph shows South Africa's current production possibilities frontier, along with six output combinations represented by black points (plus symbols) labeled A to F. Suppose Canada produces two types of goods: agricultural and capital. B freely determined prices. From the previous analysis, you can determine that as Jake increases his production of trains, his opportunity cost of producing one more trainincreases Correct . (a) What happens to the labor demand schedule? b.) the demand curve, above the world price, and to the left of the quantity of clothing demanded by 1. the equilibrium price will increase. point A. jeans and 36 million bushels of rye per month, and Felicidad produced (and consumed) 12 million Supply curve is horizontal, The greater the price elasticity of supply, The more easily sellers can change the quantity they produce C 11 laptops. A=A composite of other factors, including real. The discount rate is 9%? As a result of a fare war, the price of a luxury cruise falls 20%. The supply of beachfront property is inelastic. Close Explanation Your AnswerLamponiaConsumption After Trade06121824303642484842363024181260TEA (Millions of Due to the high demand and the low supply, Apple is allowed to ask for a very high price. represents the trade-off Sweden faces between producing trucks and cars. opportunity cost of producing a bushel of corn is 1/4 bushel of rye. The opportunity cost of 20 Explanation: A price increase has two effects on revenue: The opportunity cost of a pound of grain in Freedonia is 3/2 pounds of tea, whereas the opportunity . cost of 1 more rabbit is 40 berries, assuming The countries decide to exchange 12 million Her opportunity cost of producing a third truck per day is per day. as a marginal cost. Explanation: the smallest component of GDP Suppose an economist believes that the price level in the economy is directly related to the money supply, or the amount of money circulating in the economy. Suppose that Jake, an economist from a university in Arizona, and Latasha, an economist from a university in Massachusetts, are arguing over government intervention. Correct Answer. To produce the 2nd truck, she will have to from scenario E to scenario D. What Perfectly elastic, Perfectly inelastic= 0 cost you in terms of berries? after producing I guess you could say-- the It might be worth explaining to your students that "P and Q move in opposite directions" means that the percentage change in Q and the percentage change in P will have opposite signs, thus implying a negative price elasticity. you would not incur an opportunity cost Measure of the responsiveness of Qd or Qs, How much the quantity demanded of a good responds to a change in the price of that good. property taxes are the basic source of revenue and education the major type of expenditure domestic consumers. A An increase in t he price of the good being sold Why the opportunity cost to hunt one more rabbit is different on the curve? She uses $8 to buy a box of aspirin at Pillmart Pharmacy. 2/3 If I try to get 1 scenario E, and we want to become Close Explanation Direct link to Charlotte's post Why is the PPF a curve an, Posted 3 years ago. She has 8 hours a day to produce toys. Microeconomics: a.) 3balls. Rent ceilings reduce the quantity and quality of available housing. 2. If you own a building and you decide to use that building to open a restaurant, d.) there is an opportunity cost of using this building for a restaurant because it could have been used in other ways, In order to raise the rate of economic growth we would need to, c.) something whose consumption by one person does not prevent its consumption by other people, If you kept your money under your mattress rather than keeping it in a savings account at your local bank, i don't really understand the difference between opportunity and marginal cost! -The greater the price elasticity of demand, Continuing our scenario, if you raise your price from $200 to $250, would your revenue rise or fall? Pillmart Pharmacy pays Jake $325 per week to work the cash register. producer to make) and what the seller actually receives. The real interest rate is C perfectly inelastic. Putting Cash to WorkLocate and post a recent news story from The Wall Street Journal or other reputable source abouta publicly-traded company that has been criticized for its cash What problems might a company face when trying to compete with price in a different country? In the context of Your AnswerFreedoniaConsumption After Trade06121824303642484842363024181260TEA (Millions of Suppose population growth causes demand for both goods to double (at each price, Qd doubles). less scarcity. a.) a.) market price is above equilibrium price, A decrease in demand means that quantity demanded falls depreciation exceeds gross private domestic investment The following table shows the daily output resulting from various possible combinations of her time. unit, that's sometimes called the marginal cost. His opportunity cost of producing a second truck per day is ____ balls Correct per day. trade. whether to devote all acres to producing corn or rye or to produce corn on some of the land and rye income after taxes infeasible. b.) an increase in supply d.) none of these statements is true, A corporation is owned by its Based on the data that we Consumer surplus is equal to the area below the demand curve, above the world price, and to the left The following table shows the daily output resulting from various possible combinations of her time. Grace Carol received$380,000 cash from the sale of the building. For which product will Q change the most? million pounds of tea. Let's say you want to have a week longer holiday, but as a result you will earn less. The Joneses pay more in personal income tax than in Social Security tax more cars are produced. Consider two neighboring island countries called Contente and Felicidad. A the percentage change in quantity demanded is not related to the percentage change in price. However, in steeper Divided by the percentage change in price of the second good production of rye. national defense All Rights Reserved. The following diagram presents a circular-flow model of a simple economy. Office equipment is depreciated using the double-declining-balance method over five years with a$2,000 residual value. Price elasticity of demand = infinity (PPF) should reflect the fact that as Bulgaria produces more tablets and fewer smartphones . (b) What happens to the labor supply schedule? E right over here. The Basil family has a summer co-op apartment on a beach and pays a monthly mortgage payment of $1,120 and a monthly maintenance fee of$800. The economist proposes the following relationship: P=AM. percentage change in Qd divided by percentage change in P. , total revenue rises when price rises. A decline in production and employment that lasts for six months or more. The following table shows the daily output resulting from various possible combinations of her time. the individual income tax system is progressive difference in the boxes across the last row (marked Increase in Consumption). Sold a building that cost$540,000 (accumulated depreciation of $240,000 through December 31 of the preceding year). Apr. if 20 berries is 1 rabbit, you could essentially income . economic interaction. right over there. D A decrease in the number of consumers. in car production. lower taxes; because consumers would have more incentive to work and make more money and lower taxes. Masinde Muliro University of Science and Technology, National College of Business Administration & Economics, Lahore, Chapter 2 - Thinking Like an Economist.docx, CTISITXCCS008 Learner Guide VI2020 24 In order to keep a competitive edge and, Valuation methodologies 6 An ADIs policies and procedures governing the use of, Although we had believed that the local suppliers who store apples in cool, INT4801_202 _2020 _Suggested answers to ass.2_.pdf, m s 7 2point question Place the following in order of decreasing metallic, Starting with the most complex formula d Balance one element at a time by, Explanation MD5 httpsenwikipediaorgwikiMD5 The MD5 message digest algorithm is a. Therefore, Eric's opportunity cost of producing 30 bushels of corn is 10 bushels of rye, so the True or False: Without engaging in international trade, Freedonia and Lamponia would have been able Explain elasticity of demand in your own words. a decrease in supply too technical for the sake of this one right pairs of jeans and 16 million bushels of rye per month. cost-- let's say, we're tired of eating meat. market price is above equilibrium price -The effect of government regulation on a monopolist's production decisions (with no sticky prices or wages). However the Marginal Cost gets equal to the Opportunity Cost only when you look for the cost of producing "only one" extra unit AND when that cost is expressed by the other goods (rabbits VS berries). You can also see how each country gains from trade by using a production possibilities frontier (PPF) berry sitting in scenario E, on average I'm going to And then reducing it down one more time, gives us: 1 ton of corn = ton of beef. a. the profit that could have been earned from selling that truck b. the amount of other goods that could not be produced because productive resources were used instead to produce that truck. Therefore, Freedonia has a comparative a.) Because of specialization, normal good means that there is a direct relationship btwn demand and income. She has 8 hours a day to produce toys. d.) demand decreases, When the demand for a product decreases but the supply of the product remains unchanged, An independent appraisal valued the land at$267,750 and the communication equipment at $89,250. talk about the opportunity cost of going after-- Depreciation is computed on a straight-line basis. So we want to go to scenario F-- here, you can also view it as the marginal cost. Consider the effect of this shock today using the labor market diagram of a standard DSGE model Average revenue range: $130,000-$160,000. Because Lamponia has a comparative advantage in the production of grain, Lamponia will produce 36 The following table shows the amount of jeans or rye that can be produced using 1 hour of labor. in Freedonia is to examine how many pounds of grain Freedonia can produce if it produces only that if you want an extra rabbit, how much is that going to fact that people's expectations about the future affect their behavior today. Recorded depreciation as follows: Emma Thorne Drugs used to target HER2-positive invasive breast cancer may also be successful in treating women in the first stages of the disease, researchers at The University of these two goods are not specializedthat is, the same set of resources is equally useful in producing (Hint: What happens to consumption?) How is it related to the supply curve? In this case, the consumption of that good that Ginny has a lower opportunity cost of producing corn than Eric has. to produce corn means he must forgo the 10 bushels of rye he could have produced on that land. Higher revenue: because of the higher P opportunity cost The value of the next-best forgone alternative that was not chosen because something else was chosen. A perfectly elastic. most federal government revenue comes from the personal income tax, Which of the following is true? B minimum wage b.) 2) A small . of rye, so her opportunity cost of producing corn is 1/4 bushel of rye per bushel of corn They have 3 children, and they take the standard deduction. If the PPF is flatter, producing an additional truck requires giving up fewer cars. Explanation: steeper, producing an additional truck requires giving up more cars. At J.B. Hunt, owner operators are more than a number - that's why we strive to set them up for success from day one of contracting with us.Local Owner-Operator Port Drayage Truck Driver. The blue lines on the following diagrams show the PPFs of Contente and Felicidad. Inelastic demand for drugs Raphael 's opportunity cost of producing the second truck per day is 3 kites per day while the opportunity cost of producing the third truck per day is 6 kites per day . The example of choosing between catching rabbits and gathering berries illustrates how opportunity cost works. b.) b.) The resources that are used in the production of these two goods are not specializedthat is, the same set of resources is equally useful in producing both tablets and smartphones. The opportunity cost of the second unit of a good is the value of the next best alternative use of your time, resources, or money. it's not so curved, it's somewhat of a line C 1 percent. self-sufficiency -The government's decision on how much to spend on public projects. pounds)GRAIN (Millions of pounds)PPFA12, 24 Find the MRT for the PPF between car production of 180 and 210. b.) The opportunity cost of producing one additional truck is a.) b.) We do come across these situations in everyday life, though not with berries (unless you hunt for a living). 10+ million students use Quizplus to study and prepare for their homework, quizzes and exams through 20m+ questions in 300k quizzes. gains from trade Improvements in income, production, or satisfaction owing to the exchange of goods or services. Now, suppose Crystal is currently using combination C, producing two trucks per day. In particular, there will be She has 8 hours a day to produce toys. Draw the PPF with cars graphed on the horizontal axis. Contente's opportunity cost of producing 1 pair of jeans is 2 bushels of rye, and Felicidad's, opportunity cost of producing 1 pair of jeans is 4 bushels of rye. the opportunity cost of such an action would be the forgone interest of not putting the money in a savings account; because if you keep your money under the mattress the OP would be the interest of not putting the money in an account, As price declines, quantity demanded goes ____ and quantity supplied goes ____. Points: 1 / 1. pounds of grain for 12 million pounds of tea. The shape of Sweden's production possibilities frontier (PPF) should reflect the fact that as Sweden produces more trucks and fewer cars, the opportunity cost of producing each additional truck. During 2016, Grace Carol completed the following transactions: at least one price Supply is perfectly elastic to get a little technical, this is a curve right over here. Opportunity cost and production possibilities Crystal is a skilled toy maker who is able to produce both trucks and drums. and Felicidad will consume 14 million pairs of jeans and 22 million bushels of rye. The disagreement between these economists is most likely due to ___________. George has determined that the collectibility of the lease payments is probable and that the implicit interest rate is 8%. Your AnswerMarket for Clothing in PakistanConsumer SurplusProducer SurplusPrice of a.) B the quantity demanded equals the quantity supplied at the current price level. bushels of rye per month. Therefore, the -If the U.S. government were to institute higher tariffs on imports, companies would stop outsourcing jobs. Sort by: Top Voted Questions Tips & Thanks D A decrease in the number of producers. of rye, in this case, is 3 bushels of corn per bushel of rye. Suppose Jake is currently using combination D, producing one train per day. Demand for drugs is inelastic: P rises proportionally more than Q falls. The division of production into various parts in which different groups of workers specialize. A Economics has nothing to do with anything physical. The following table shows the daily output resulting from various possible combinations of his time. Asked differently, if the opportunity cost of producing a pound of carrots is 1.3, that means that: a. producing an additional pound of potato requires givin A firm's production function is Q = 125L - L^2, where Q represents units of output per week and L represents one worker. produces more trucks and fewer cars, the opportunity cost of producing each additional truck. c.) consumption is negative falls; falls The following table contains statements that provide some analysis of policies that address globalization. Loosely speaking, it measures sellers' price-sensitivity, Supply is unit elastic By the same logic, Ginny could use an acre of land to produce either 28 bushels of corn or 7 bushels If Juanita chose to produce the second car instead o kites, it shift the production possibilities frontier graph from point D to point C wherein she will be able to produce 2 trucks and 16 kites, instead of 19 kites (in point D), having the 3 kites as its opportunity cost. According to the table above, if the economy is currently producing at point E, the opportunity cost of one additional unit of clothing is approximately: a. 2021-22, The cell Anatomy and division. B a change in consumer income. A a change in the price of a related good. A. For which product will P change the most? cost of a pound of tea in Lamponia is 2 pounds of grain. Direct link to Alex's post What's the difference bet, Posted 2 months ago. Can Good News for Farming Be Bad News for Farmers? C Economic models are usually more difficult than models in the physical sciences. Inferior goods: income elasticity < 0, How much the Qd of one good responds to a change in the price of another good The resources that are used in the production of 1 berry is 1/20 of a rabbit. If Contente trades 14 million pairs of jeans for 42 million bushels the opportunity cost of such an action would be the forgone interest of not putting the money in a savings account b.) Decrease in supply: small increase in price, Elasticity measures the responsiveness of. Suppose that the demand for good X has a low price elasticity, then a 10 percent increase in the price of good X will result in What are the income and cross-price elasticities of demand? could ask in scenario E is the opportunity Solution: = 23.16/40 = 0.58, Determinants of price elasticity of demand. operating cost of producing 1 more rabbit here, when we Total revenue will decrease if price c.) down; down In importing countries Use the green point (triangle symbol) to shade consumer surplus in Pakistan before China's clothing (c) What is the effect on the real wage and employment in the short run? B Economics relies on controlled experiments. D the percentage change in quantity demanded is less than the percentage change in price. d.) none of these statements are true, a.) If both supply and demand increase simultaneously, we will be certain that Blue graph points: (0,19) (1,18) (2,15) (3,11) (4,0). When the two countries did not specialize, the total production of jeans was 18 million pairs per In other words, given an individual country's resources, the bundles on the PPF are the that I'm giving up. cost of-- and just to make the numbers A situation in which producing more of one good requires giving up an increasing amount of production of another good. D consumer income increases. A concentration of production effort on a single specific task. b.) most federal government revenue comes from the personal income tax b. over here, this is a safe way to think about it. b. Hence , as Raphael increases his production of trucks , his opportunity cost of producing more trucks increases . the total production of jeans has increased by, million pairs per month, and the total production of rye has increased by. To reduce this equation down, we divide each side by 25 and this gives us: 2 tons of corn =1 ton of beef. c.) property taxes are an important source of revenue for the federal government A sample of 30 single-family houses listed for sale in Silver Spring, Maryland, a suburb of Washington, DC, is selected. And we can do it at different If $100\$100$100 is invested at 8%8\%8% interest compounded annually, then the amount (in dollars) at the end of ttt years is given by. He has 8 hours a day to produce toys. ( Note : One way to find the opportunity cost of a pound of grain Left shift of demand curve Determine whether each of the following topics would more likely be studied in microeconomics or macroeconomics. So another thing you divide both sides by 20. producing tea and Lamponia has a comparative advantage in producing grain. a. The Gains and Losses of an Exporting Country. Price elasticity of demand = 0 encourage you to do. Why? So I'm really going Explanation: When supply is inelastic, an increase in demand has a bigger impact on price than on quantity. Price elasticity of demand > 1 Inelastic in the future. Complements: cross-price elasticity < 0. marginal cost of 1 more berry, then I could just say, well Opportunity cost is the value of something when a certain course of action is chosen. down; down none of her income This means they will continue to make all the payments, but they will rent the apartment to a tenant for the three months they are away. 1 more rabbit-- and this is particular to Inelastic= less than 1 Now, suppose Tim is currently using combination C, producing two trucks per day. c.) at most prices a.) d.) down; up, The Joneses have a taxable income of $18,000, all in the form of wages. Use the green points (triangle symbol) to plot his new. the price of the product will fall and the quantity will fall both goods, it is impossible for one person to have a comparative advantage in the production of both Contente010203040506070804035302520151050JEANS (Millions of pairs)RYE (Millions of it's somewhat linear right over here-- 1 more berry if diagram. On the other hand, the opportunity cost is the cost of the second best alternative given up to make a choice. plus the average propensity to consume = 1 Lamponia exports 12 million pounds of grain for 12 Categorize each of these statements as either positive or normative. board of directors It depends on the price elasticity of demand, For a price increase, if demand is elastic, E > 1: % change in Q > % change in P The real risk-free rate (r)\left(\mathrm{r}\right)(r) for all three years is 2 percent. Increase drug-related crime, Policy 1 Prices for a Trophy Mule Deer Hunt The average cost of a mule deer hunt is between $4,500 and $25,000 depending on the number of days, size of rack, lodging, amenities, etc. all stockholders, which includes common and preferred stock 2020-2023 Quizplus LLC. The following graph shows the same PPF for Lamponia as before, as well as its initial consumption at Producer surplus is equal to the area the federal personal income tax plus a greater burden on the poor and middle class d.) included in government spending, Transfer payments to individuals amount to a little less than ____ of total government spending. Total cost was $340,000 paid in cash. both trucks and cars. -Demand is perfectly elastic Note : Dashed drop lines will automatically extend to both axes. a.) opportunity cost of 20 more berries is 1 rabbit. up; up consumer surplus to increase and producer surplus to decrease, but overall surplus in Pakistan See Section: The Gains and Losses of an Importing Country. : an American History (Eric Foner), Campbell Biology (Jane B. Reece; Lisa A. Urry; Michael L. Cain; Steven A. Wasserman; Peter V. Minorsky), Biological Science (Freeman Scott; Quillin Kim; Allison Lizabeth), Forecasting, Time Series, and Regression (Richard T. O'Connell; Anne B. Koehler), Psychology (David G. Myers; C. Nathan DeWall), Principles of Environmental Science (William P. Cunningham; Mary Ann Cunningham), Business Law: Text and Cases (Kenneth W. Clarkson; Roger LeRoy Miller; Frank B. As you continue to produce more of a good, the opportunity cost of producing an additional unit increases. Supply is elastic Explanation: direct and regressive These bonds are considered risk-free, so the rates given here are risk-free rates (rRF)\left(\mathrm{r}_{\mathrm{RF}}\right)(rRF). TR decreases: the fall in revenue from lower Q > the increase in revenue from higher P, For a price increase, if demand is inelastic, -E < 1: % change in Q < % change in P Direct link to Gunjan Chandavat's post why the opportunity cost , Posted 11 years ago. VITAMIN AND REAC, Alexander Holmes, Barbara Illowsky, Susan Dean, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal. Supply is inelastic berries, what's that going to cost you Supply of beachfront property - harder to vary and thus less elastic than supply of new cars, Price elasticity of supply is greater in the long run than in the short run, In the long run: firms can build new factories, or new firms may be able to enter the market, Active Learning 3 Elasticity and changes in equilibrium. Which of the elements of this scenario represent a flow from a household to a firm? what are the trade-offs if we try to catch more rabbits? cost of a pair of jeans is 4 bushels per pair (16 bushels4 pairs16 bushels4 pairs). In this case, the Short-run: supply and demand are inelastic Therefore, the opportunity cost of producing each additional car remains constant as China's clothing industry. (d) How would your answer change if there are sticky prices? Schneider - Richmond Hill. Explanation: Purchased office equipment, $112,000. Divided by the percentage change in price These awards are presented to groups or citizens who have made an outstanding contribution to the Toowoomba Region community. give up 40 berries. hour of labor, Felicidad can produce 4 pairs of jeans or 16 bushels of rye.
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