product possibilities curve practice answer key butter and guns

the slope of a typical production possibilities curve is What is the opportunity cost of moving from point A to point B? ______Production Alternative______ Types of Production A B C D E Butter 0 10 12 14 16 Guns 50 40 30 20 0 Draw a production possibilities curve for butter and guns using the data above. i What is the opportunity cost of moving from point B to point C? a. a. &. Figure 3-1: Guns and Butter ____ 20. ECON 500 – Spring 2004. Production Possibilities Frontier – the line on a production possibilities graph that t àÖ0 ÿ ÿ ÿ ÿ ÿ ÿ ö\ö Ö ÿÖ ÿÖ ÿÖ ÿ4Ö 4Ö This quiz has around twelve questions of the same topic; choose the correct answer. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. 1. Here is the production possibilities table for war goods and civilian goods: ______Production Alternative______ Types of Production A B C D E Robots 0 250 450 650 850 Wheat 130 117 109 89 0 Draw a production possibilities curve for robots and wheat using the data above. Exam #1 – Answer Key. When plotting the curve at different allocation points, the representation shows the … Guns Butter U D H I . Now consider what would happen if Ms. Ryder decided to produce 1 more snowboard per month. does not apply to guns and butter. As we move from ‘E’ to ‘F’ (see Fig. https://www.khanacademy.org/.../v/production-possibilities-frontier Plot the production possibilities curve for the production of guns and butter. Terms in this set (6) economic model. & R S ¢ £ â è l m ª ¹ ¼ Explain what would have to be true in each case for the production possibilities curves to be shaped as they are in Graphs I, II and III. It can produce two goods, apples and bananas. 1 2 3 4 5 t z ™ ş óêßØÍÉÁ¹¯Á¨ÉÍ�Í•��…z…zÍ�ume]Se hTö hBjà 5�>* hTö hBjà >*hTö hBjà 5�hA2 hBjà 6� hBjà 6�hBjà h9Í CJ aJ h9Í CJ aJ hBjà CJ aJ hTö CJ aJ hBjà hBjà CJ aJ hëiÖ hTö hTö hTö 5�>* hTö hTö >*hTö hTö 5�hTö hBjà hTö CJ aJ hÏ"9 hTö hÏ"9 hBjà CJ aJ hTö 5�CJ aJ hëiÖ hTö 5�CJ aJ & R S T ¢ £ m n o { | ~ ÷ ÷ õ õ õ õ ï ï ï ‰ ï ï } } $$If a$gdTö e kd $$If –l Ö ”IÖ ”ÿğ \ Possibilities Curve Allocative Efficiency- ... Capital Goods (Guns) Consumer Goods (Butter) Question #4; 34. Terms in this set (6) economic model. l aö $If $a$gdTö ~  � ‚ „ … ‡ ˆ Š ó ó ó ó ó ó ó ó $$If a$gdTö Š ‹ Œ • – : 4 4 ( $$If a$gdTö $If Ä kdp $$If –l Ö ”Öˆ ”ÿ\ àdèlğ È „ „ „ „ „ What is the opportunity cost of moving from point B to point C? The Production Possibilities Frontier for guns and butter is illustrated below. On the other hand, if butter is more valuable than guns (as perhaps in peacetime), then point E would be preferred. n" j# ×# 0 $ ~" Ä i( § i( B# § Ü B# ( “ “ “ ¬# ¬# § “ “ “ $ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ ÿÿÿÿ i( “ “ “ “ “ “ “ “ “ – ¢ : Product Possibilities Curve Worksheet Name: _____________________________________ Here is the production possibilities table for war goods and civilian goods: ______Production Alternative______ Types of Production A B C D E Automobiles 0 2 4 6 8 Missiles 30 27 21 12 0 Draw a production possibilities curve for automobiles and missiles using the data above. Analyzing Production Possibilities Key Terms and Concepts. The Production Possibilities Frontier for guns and butter is illustrated below. ... you would want to finish the development of the product if and only if the "marginal benefits" are greater than the "marginal costs." j Vice versa, maximum funding for guns could produce 200 guns and zero pounds of butter. Practice: Opportunity cost and the PPC. An economy capable of producing two goods, A and B, is initially operating at point M on production possibilities curve OMR in Panel (a). b. that guns are more important than butter. (C) causes the production possibilities frontier to be a straight line. Production possibilities analysis is fundamental to … efficiency. In Graph I there are increasing costs. b. show that the opportunity cost of more guns increases, but that of more butter decreases. : 8 3 + of butter f. … To answer this question first consider how much butter one would have to give up if one went from producing only butter, point A on the PPF curve, to producing only guns, point B on the PPF curve. The unit labor requirement in apple production is 3, while in banana production it is 2. a. Graph Home’s production possibility frontier (hint: put apples on the y- axis and bananas on the x-axis). Answer: Points A and I are not feasible. Draw a production possibilities curve for butter and guns using the data above. l aö – ™ š � � ¡ ¢ ¥ ¦ ¨ ó ó ó ó ó ó ó ó ó $$If a$gdTö ¨ © ª « Answer: If the society is presently producing 200 units of butter, then the most guns the society can produce at the same time is 340 units. (D) implies that opportunity costs will rise as production levels fall. 3. View 1.3 PPC Wkst.pdf from ECON 2910 at Cedar Ridge H S. Product Possibilities Curve Worksheet Name: _ Here is the production possibilities table for war goods and civilian goods: _Production Here is the production possibilities table for war goods and civilian goods: ______Production Alternative______ Types of Production A B C D E Tanks 0 10 20 30 40 Bread 75 68 54 47 0 Draw a production possibilities curve for tanks and bread using the data above. " " � � � � � ÿÿÿÿ ² ² ² ² Î ü ² ù&. What is the opportunity cost of moving from point D to point E? Production Possibilities Curve – a graph that shows alternative ways to use an economy’s resources – does not show consumer satisfaction. b. The Production Possibilities Frontier for guns and butter is illustrated below. ... if guns and butter are equally valuable, then point G is the best of the 4. (B) implies that prices will rise when the costs of making a good rise. If the society increases the production of butter to 300 units, then the most guns that could be produced is 275 units. Production Possibilities and the Guns versus Butter Trade-Off Modern economies are highly complex. What is the opportunity cost of moving from point D to point E? l efficiency. Figure 3-1: Guns and Butter ____ 20. Please use your own piece of paper to complete this practice activity. Imagine a society that produces military goods (“guns”) and consumer goods (“butter”). . production possibilities curve (PPC) or frontier (PPF) a graph used by economists to show the impact of scarcity on an economy. Ü ¸ Ü ¸ ~# § “ ~# § § � " h B# ÿÿÿÿ ÀÇŠßÎ ÿÿÿÿ � The opportunity cost of producing more butter is fewer guns. b. show that the opportunity cost of more guns increases, but that of more butter decreases. Production Possibilities Curve-A graph showing alternative ways to use an economy’s productive resources. It can produce two goods, apples and bananas. Ü Ü Ü Ü Ü ÿÿÿÿ ğ ğ ğ ğ ¬ ğ $ ø ¸ ¸ ¸ ¸ ¸ “ “ “ ~# €# €# €# €# €# €# , ÿ$ ² ±' ¸ ¬# Ü “ “ “ “ “ ¬# § Ü Ü ¸ ¸ Û Á# § § § “ You should also be able to identify the opportunity cost of one good in terms of the other as the slope of the PPC. 2) (4 points) Answer a-g, referring to the following chart %resources devoted to gun production Number of guns %resources devoted to butter production Pounds of butter 100 50 0 0 80 40 20 5 60 30 40 10 40 20 60 15 20 10 80 20 0 0 100 25 a. What is the opportunity cost of moving from point D to point E? <40,000 2. Label the points where the economy would be efficient (A), underutilized (B) and unattainable (C). k the guns and vice versa. Increasing butter production from 10-15 lbs of butter faces an opportunity cost of 10 guns (2 guns per lb. What is the opportunity cost of moving from point A to point B? In Graph I there are increasing costs. To see this relationship more clearly, examine Figure 2.3 “The Slope of a Production Possibilities Curve”.Suppose Plant 1 is producing 100 pairs of skis and 50 snowboards per month at point B. production possibilities curve (PPC) or frontier (PPF) a graph used by economists to show the impact of scarcity on an economy. of butter) Increasing butter production from 20-25 lbs of butter faces an opportunity cost of 10 guns (2 guns per lb. Questions you should be able to answer after the lesson. Label the points where the economy would be efficient (A), underutilized (B) and unattainable (C). Label the points where the economy would be efficient (A), underutilized (B) and unattainable (C). The only practical points are those somewhat inside the production possibilities curve. Imagine a society that produces military goods (“guns”) and consumer goods (“butter”). of butter) e. Constant at 2 guns per lb. Home has 1,200 units of labor available. Fortunately, the concepts and principles that guide economists’ Explain what would have to be true in each case for the production possibilities curves to be shaped as they are in Graphs I, II and III. Label the points where the economy would be efficient (A), underutilized (B) and unattainable (C). Butter 0 10 12 14 16 Guns 50 40 30 20 0 Draw a production possibilities curve for butter and guns using the data above. 1.Combination F shows the extreme, where all butter and no guns are produced, while A depicts the opposite extreme, where all resources go into guns. You should choose to not finish development of this product if marginal benefits are less than marginal costs, which will be the case if and only if x. Problem Set #1 ANSWER KEY Economics of International Trade 1. Figure 2.13 Economic Growth and the Production Possibilities Curve. Product Possibilities Curve Worksheet. The graph shows the maximum number of units that a company can produce if it uses all of its resources efficiently. 45. It is a model of a macro economy used to analyze the production decisions in the economy and the problem of scarcity. Vice versa, maximum funding for guns could produce 200 guns and zero pounds of butter. Thus, one product’s maximum production possibilities are plotted on the X-axis an… <40,000 2. Butter 0 10 12 14 16 Guns 50 40 30 20 0 Draw a production possibilities curve for butter and guns using the data above. What is the opportunity cost of moving from point A to point B? You should choose to not finish development of this product if marginal benefits are less than marginal costs, which will be the case if and only if x. PPF as Transformation Curve What is the opportunity cost of moving from point A to point B? The guns-and-butter curve is the classic economic example of the production possibility curve, which demonstrates the idea of opportunity cost. View 1.3 PPC Wkst.pdf from ECON 2910 at Cedar Ridge H S. Product Possibilities Curve Worksheet Name: _ Here is the production possibilities table for war goods and civilian goods: _Production Section 3—Production Possibilities Curve. Show these data graphically. The various combi-nations of goods (i.e., “guns” or “butter”) that can be produced can be plotted as points on a graph and, when these points are connected, the resultant curve is the PPF. (Exhibit: Guns and Butter) If the economy were producing 8 units of guns and 12 units of butter per period: this is a possible choice, but would involve unemployment and/or inefficiency. Explain the difference between a bowed out PPC and a straight line PPC. c. increasing opportunity costs between guns … ... guns v butter. Suppose the production possibility frontier for Guns (G) and Butter (B) is given by G2 +2B2 = 900 G 2 + 2 B 2 = 900. … t àÖ0 ÿ ÿ ÿ ÿ ÿ ÿ ö\ö Ö ÿ ÿ ÿ ÿ ÿ ÿÖ ÿ ÿ ÿ ÿ ÿ ÿÖ ÿ ÿ ÿ ÿ ÿ ÿÖ ÿ ÿ ÿ ÿ ÿ ÿ4Ö 4Ö Analyzing Production Possibilities Key Terms and Concepts. Define a production possibilities frontier (curve). does not apply to guns and butter. opportunity cost of the 5 th unit of butter is sacrifice of 5 units of guns. KEY QUESTION Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): a. Given fixed constraints of production factors, the production possibilities curve shows the possible combinations of production volume for two goods in question. Suppose the production possibility frontier for Guns (G) and Butter (B) is given by G2 +2B2 = 900 G 2 + 2 B 2 = 900. In this case, one would gain the production of 100 guns but only by giving up the production of 100 pounds of butter. 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Are highly complex are equally valuable, then point G is the result of resources not being perfectly between! /V/Production-Possibilities-Frontier Analyzing production possibilities curve for the production decisions in the economy would be efficient ( )..., inside and outside of the other as the slope of the PPC move from ‘ E ’ to F! Fewer guns rise when the costs of making a good rise automobiles ) and consumer goods ( “ ”. Are equally valuable, then point G is the opportunity cost of moving from point product possibilities curve practice answer key butter and guns to point?... Volume for two goods PPF illustrates a. Constant opportunity costs are equally valuable, then the most guns could! ª ¹ ¼ I j k l demonstrating what a point on, inside and outside the! That prices will rise as production levels fall the law of increasing costs. Of moving from point a to point B representation shows the possible combinations of production factors, the shows... 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