Use the following four graphs for Questions 1 - 2.
Question #1: Suppose Will makes a technological discovery that allows him to become more efficient in the production of GBD shirts but does NOT affect his ability to produce more GBD hats. Which graph shows the most likely impact on Will’s PPF?
A. A
B. B
C. C
D. D
A. A
B. B
C. C
D. D
When a technological discovery (or setback) happens that relates to only ONE product on the PPF, that is the only product affected. That means we can cross out any graphs that correspond to a change in GBD Hats (A, B, & C)...
...leaving us with answer choice D! This is the only graph that correctly only affects GBD Shirts. As stated in the problem, the technological discovery causes Will to be able to produce more GBD Shirts, resulting in the PPF expanding on the y-axis (corresponding to GBD Shirts).
PAID CONTENT This is the end of the preview. To unlock the rest, get the ECO 201 Module 1 Cram Kit, Lifetime Access or ECO 201 Cram Kit Bundle.
Already purchased? Click here to log in.
Question #1: Which of the price and quantity combinations in the accompanying graph represents the market of Nike Air Forces at competitive equilibrium?
A. $70 and 80 shoes
B. $20 and 50 shoes
C. $40 and 100 shoes
D. None of the above
A. $70 and 80 shoes
B. $20 and 50 shoes
C. $40 and 100 shoes
D. None of the above
Remember: The equilibrium point in a perfectly competitive market is located where your supply and demand curve intersect.
In our Nike Air Forces market, the supply and demand curves intersect at a quantity of 100 shoes and an equilibrium price of $40!
Therefore, we'll choose answer D!
PAID CONTENT This is the end of the preview. To unlock the rest, get the ECO 201 Module 1 Cram Kit, Lifetime Access or ECO 201 Cram Kit Bundle.
Already purchased? Click here to log in.
Question #1: Based on the opportunity cost for each trader, comparative advantage and _______ make it possible to achieve gains from trade between people, corporations, and countries.
A. Absolute Advantage
B. Specialization
C. Production
D. Technology
Use the following table to answer Questions 2 - 3.
Billy and Max use the same amount of resources to produce pizzas and milkshakes. Max produces 5 pizzas per hour or 3 milkshakes per hour. Billy produces 3 pizzas per hour or 2 milkshakes per hour.
PAID CONTENT This is the end of the preview. To unlock the rest, get the ECO 201 Module 1 Cram Kit, Lifetime Access or ECO 201 Cram Kit Bundle.
Already purchased? Click here to log in.