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Microeconomics basics
The production possibilities curve econ flashcards
Microeconomics basic concepts
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CHAPTER 1 Questions: 3. The biggest opportunity cost would come from allocating a square block in the heart of New York City for a surface parking lot. The reason for this is because the value of a square block in the heart of New York City would command a much higher price than one of just a suburb. Therefore, the sacrifice, or opportunity cost, would be greater giving up a block in the heart of New York city. 7. a. Macroeconomics b. Microeconomics c. Macroeconomics b. Macroeconomics e. Microeconomics f. Macroeconomics 8. According to the book, economic resources are natural, human, and manufactured resources that are classified as land, labor, capital, and entrepreneurial ability; all of which are used in the production of goods and services (pg. 426). These resources are also called factors of production because they assist within the production process. They are also inputs because the goods and services are ingredients to help …show more content…
a. PRODUCT A B C D E F Candy Bar 0 4 8 12 16 20 Peanuts 10 8 6 4 2 0 20 Candy Bars b. Slope is -2 of the budgeted line, the opportunity cost of another candy bar is .5 a bag of peanuts, and the opportunity cost of another peanut is 2 candy bars. With that being said, the opportunity costs are constant, this can be explained by looking at the consumption alternatives chart above. c. You would have to use your own judgment or preference for candy bars and the peanuts to be able to determine what combination to buy because the budget line and the consumption alternatives does not tell you which of the available combinations to buy. d. This would increase; the $30 budgeted line would be more prefreable to the old one beacue it allows more consumption of both candy bars and peanuts 20 40 Candy Bars 5. a. The specific assumptions this production possibility curve is based upon employment, fixed supplies/resources, technology, and these two
There are two solutions that provide the optimal profit given the current constraints under which JP Molasses operates. Under these conditions, the optimal profit is $63,571. This profit margin is achieved in both cases with revenue of $942,354 and cost of $412,333 for material purchased and $466,450 for fixed and variable costs in processing, for total cost of $878,783.
and documenting the amount of time spent exercising each day. The second full would, the B
A. I will talk to you about overpopulation of deer in Alabama, while convincing you why
C. With the earnings you make, you will be able to pay for your child's education. You can even start saving now to pay for a future child.
Option 2 has long term sustainability. It involves a one term expense, and provides revenues for the foreseeable future.
In the equation above it the product of K and P that is responsible for economic growth. It would appear then that K, the ratio of productive to unproductive labor, and P, the productivity rate are equally important factors in this determinance. However, Smith says that this is not so. The ratio of productive to unproductive labor does not change much over time, says Smith.
C. It concerns you because 1/3 of all Americans have a panic attack by the time they’re adults, and 3 out of 4 don’t receive the treatment they need.
A. I asked my friend his opinion and he replied, “It’s their own fault. They do it to themselves by being lazy or with their drug habits.”
A. To further my understanding of my friends business plan I would need to know the following:
For instance, if a business wants to produce 5,000 more t-shirts, yet it will require the purchase of another machine, the marginal cost for the extra t-shirts includes the cost of the new machine. A marginal product describes the additional output that results from adding one more unit of input. It can be calculated by dividing the change in the total product by the change in the variable input. For example, in order to increase the t-shirt productivity by 1000 units, the company may hire two new employees to the production line. In which case, the total change in product is 1000 units. Although, hiring two more employees increases productivity, now the law of diminishing marginal product applies. Diminishing marginal product primarily indicates that increasing one input while retaining other inputs at the same level will initially increase output; however, further increase in the output level will eventually diminish. For example, hiring an extra two employees to increase productivity, will eventually have a limited effect or diminish the average income. Production function is a graph utilized to demonstrate the relationship between physical inputs and outputs, define marginal product, and distinguish allocative
Products requiring similar resources (bread and pastry, for instance) will have an almost straight PPF and so almost constant opportunity costs. More specifically, with constant returns to scale, there are two opportunities for a linear PPF: if there was only one factor of production to consider or if the factor intensity ratios in the two sectors were constant at all points on the production-possibilities curve. With varying returns to scale, however, it may not be entirely linear in either
II. When you walk through the school entrance to be processed, you will be happy to learn that you are not one of the people who need to get help!
Incremental costs are narrowly related to the notion of marginal cost but the concept bears a relatively broader connotation. Marginal costs refer to the change in the total cost emanating from producing an extra unit of output, whereas incremental cost denotes to the total extra costs linked with the decision to add new variety of product or to expand output. It signifies the difference between two substitutes. So both concepts are concerned with the variance in the total cost where marginal costs denotes to the decrease or increase in that results from distributing or producing an extra unit of output and, increment cost means to the variance in the overall output that rises from change in the ways and means of distribution and production, e.g. addition of a territory or product, technological improvement or addition of a sales channel.
a. There has been a major price increase since both my parents began to smoke.