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Chapter - 01 Limits, Alternatives, and Choices

In: Business and Management

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Chapter - 01 Limits, Alternatives, and Choices: Chapter 1: #11, 12
Question 11
Explain how (if at all) each of the following events affects the location of a country’s production possibilities curve:
a. The quality of education increases – Production possibilities will increase
b. The number of unemployed workers increases – Production possibilities will decrease
c. A new technique improves the efficiency of extracting copper from ore – Production possibilities will increase
d. A devastating earthquake destroys numerous production facilities – Production possibilities will decrease

Question 12
Suppose that, on the basis of a nation’s production possibilities curve, an economy must sacrifice 10,000 pizzas domestically to get the 1 additional industrial robot it desires but that it can get the robot from another country in exchange for 9000 pizzas. Relate this information to the following statement: “Through international specialization and trade, a nation can reduce its opportunity cost of obtaining goods and thus ‘move outside its production possibilities curve.’”

Production possibilities curves dictate that individual nations are limited to output combinations that fall within the parameters of its possibilities curve. Specialization in an area has the same effect as higher education or technological advance, it increases outputs and there is economic growth. The international country specializes in a certain process and uses domestic resources to produce the item. Trading with this country means we will not purchase the goods locally but rather exchange this opportunity for acquisition of goods produced internationally.

Chapter 1 Appendix Graphs and Their Meaning Questions

Question 1
(a) Briefly explain the use of graphs as a way to represent economic relationships. Graphs illustrate the relationship between two sets of data
(b) What is an…...

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