The graph shows the identical production possibilities of two countries, A and B. They face an increasing opportunity cost of economic growth. The production possibilities of country B are growing faster than country A. Draw a point at which country A might be producing. Label it A. Draw a point at which country B might be producing. Label it B. Draw country A's PPF after one year. Label it PPF_A. Draw country B's PPF after one year. Label it PPF_B. In the above example, the opportunity cost of economic growth is ______ . A. the increase in human capital
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First, we need to draw a graph with two axes. The x-axis can represent one type of good (for example, cars) and the y-axis can represent another type of good (for example, computers). Show more…
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Activity Imagine that a country can produce just two things: goods and services. Assume that over a given time period it could produce any of the following combinations: Units of goods 10 20 30 40 50 60 70 80 90 100 Units of services 80 79 77 74 70 65 58 48 35 19 a. Draw the country's production possibility curve b. Assuming that the country is currently producing 40 units of goods and 70 units of services, what is the opportunity cost of producing another 10 units of goods? Explain how the figures illustrate the principle of increasing opportunity cost
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Visualize a straight down-slope PPF (Production Possibility Frontier/Curve) for two countries the United States and Taiwan. Both countries produce YO-YOs and Tennis Shoes. The PPF for the United States shows that on the Y-Axis its Output for YO-YOs is 100 million (per year) and X-Axis its Output for Tennis Shoes is 25 million (per year). The PPF for Taiwan shows that on the Y-Axis its Output for YO-YOs is 20 million (per year) and X-Axis its Output for Tennis Shoes is 10 million (per year). Considering the PPFs for both countries, the opportunity cost of producing 1 YO-YO in Taiwan is: Answers: A. 2 pairs of tennis shoes. B. One-half of a yo-yo. C. Greater than the opportunity cost in the United States. D. Equal to the opportunity cost of producing 1 yo-yo in the U.S.
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Country A and country B produce the same consumption goods and capital goods and currently have identical production possibilities curves. They also have the same resources at present, and they have access to the same technology. a. At present, does either country have a comparative advantage in producing capital goods? Consumption goods? b. Currently, country A has chosen to produce more consumption goods, compared with country B. Other things being equal, which country will experience the larger outward shift of its PPC during the next year?
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