PPF and Opportunity cost questions. Your score is neither recorded nor transmitted to your instructor. Exhibit 2 Answer: See Exhibit 7. The opportunity cost of T in country 2 is A=40-5T. British study offers new insights on coronavirus in schools . Exhibit 7 b. 2. Practice Questions to accompany Mankiw & Taylor: Economics 2 d. Why is her production possibilities frontier a straight line instead of bowed out like those presented in Chapter 2? Production levels within the PPF are not attainable . Based on the PPF in the figure, the opportunity cost of producing the seventh carrot is. A PPF has constant opportunity cost if the opportunity cost of a good stays the same no matter how much of it is being produced so the PPF will be a straight line (a triangle shape). The PPF can be used to calculate the opportunity cost of various production decisions. Directions This quiz contains 15 multiple choice questions. Quiz on the PPC, Opportunity Cost, and the Gains from Trade. a) 5 coconuts. Im looking through my book and i see that i have made a note on ppfs' i wrote that "to show rising opportunity cost we must assume maximum efficiancy plus factors of production are not perfectly reallocateable" and next to ithe ppf diagram i noted "we used the best facotrs first" I understand that it has to be max. Free goods j. Phelps to Olympians: 'Do what you can control' In leaked recording, Biden gripes about activist slogan 2017/2018 For the equation TL = 25000 - (YL)2 /1000 the derivative d(TL)/d(YL)— the amount of TLs you tradeoff by changing the number of YLs—is - (YL)/500. Answer: Because Angela’s productivity in pot and mug production is constant – it doesn’t depend on how many mugs or pots she is making. What do you think is the opportunity cost of moving from point B to C in terms of the butter given up to produce the extra guns? Now divide both sides by 20 to get: The O.C. Answer Save. The following TWO questions refer the diagram below, which illustrates the PPF for a producer of two goods, x and y. Next lesson. In fact, such a movement along the PPF illustrates one of the most important concepts in microeconomics we've already briefly touched upon, the concept known as opportunity cost. This question does precisely that! This happens because all the economy's resources are already in use, and therefore obtaining more cars would always require sacrificing some milk. I cannot work out why the opportunity cost varies along a gradient on a PPC/PPF. The following TWO questions refer the diagram below, which illustrates the PPF for a producer of two goods, x and y. Quiz Questions and Answers: Opportunity Cost and PPF Lena and Jess are roommates. Answered What is opportunity cost and PPF ?? Dayne Lee. If you always set up your information like this you can easily calculate the opportunity cost for any question. The opportunity cost of 20 wood is 10 food, or the OC of 20 wood = 10 food. Swinburne University of Technology. c. Opportunity cost - to gain more of a good, something else must be given up. In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). 5. 1 decade ago. But, opportunity cost usually will vary depending on the start and end points. Click here to get an answer to your question ️ what is opportunity cost and PPF ?? Why does Opportunity Cost vary along a PPF Gradient? c) 5/10 fish d) 10/5 coconuts. b) 10 fish. The basic economic problem is one rooted in both the natural world and in human greed. 2. Practice Questions to accompany Mankiw & Taylor: Economics 2 a. Ask your question. Answer the following questions with respect to the figure below (a) The opportunity cost of moving from point b to c is 10 units of butter. In economic terms, the negative slope is due to the presence of opportunity cost. A comprehensive database of opportunity cost quizzes online, test your knowledge with opportunity cost quiz questions. Practice Questions 2 - Opportunity Cost and Trade Practice question with answers. Also known as PPC. This short revision video looks at a PPF with diminishing returns (increasing marginal opportunity cost) and a linear PPF where the marginal opportunity cost is constant. Question: 96. Economic Principles (ECO10004) Uploaded by. Image Transcriptionclose. 1 Answer to 1) A normal PPF exhibits ___ opportunity costs.zeroconstantdecreasingincreasing. Given the PPF illustrated, what is the opportunity cost of moving from B to A? Consider the question, “How much does it cost to go to college for a year?” We could add up the direct costs like tuition, books, school supplies, etc. Think about what happens to the opportunity cost of TLs—measured in units of yoga lessons (“YL”)—as the amount of resources devoted to producing TLs increases. Explain briefly. In Exhibit 2, plot and connect these points to create Athletic Country's production possibilities frontier. Have a go! Economic goods i. c) 5/10 fish d) 10/5 coconuts. Geoff Riley FRSA has been teaching Economics for over thirty years. If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing. Explanation: A When the seventh carrot is produced, production of tomatoes goes from 10 to 8, so the opportunity cost is 2 tomatoes. The negative slope of the PPF illustrates the fact that larger quantities of cars correspond to a smaller amount of milk, and vice versa. Finally, a PPF has decreasing opportunity costs if the opportunity cost of a good gets smaller as more of it (this promotes specialization) and the PPF will be bowed in (like a crescent moon). Maximum possible combinations of food and clothing that can be produced in a given period of time: Units of food (millions) Units of clothing (millions) 8.0 0.0 7.0 2.2 6.0 4.0 5.0 5.0 4.0 5.6 3.0 6.0 2.0 6.4 1.0 6.7 0.0 7.0 Draw a PPF for this economy. Results From Past Managerial Decisions. A. Lv 5. If Athletic Country currently produces 100 bats and 400 rackets, what is the opportunity cost of an additional 100 bats? She has 8 hours a… Given the PPF illustrated, what is the opportunity cost of moving from B to A? For example, given a set of scarce resources, in order to produce additional “butter,” a society has to give up the opportunity to produce some “guns.” Sort by: Top Voted. Join now. 2 tomatoes; B. These are examples of explicit costs, i.e., costs that require a money payment. Opportunity cost and production possibilities Juanita is a skilled toy maker who is able to produce both trucks and puzzles. As you rproduce more, you … Course. a) 5 coconuts. This economy’s PPF is linear between each of the points given in the table (thus, the PPF is linear between points A and B, linear between points B and C, but not linear between points A and C). An insufficient quantity to satisfy everyone’s wants 10. a. 4 Answers. Lesson summary: Opportunity cost and the PPC. 2.…the opportunity cost of increasing production of Good A from 1 unit to 2 units is the loss of _____ unit(s) of Good B. This is the currently selected item. However, these costs are small compared to the value of the time it takes to attend class, do homework, etc. Products that have an opportunity cost 6. Lena hates to clean the bathroom. As you can see, to move from point A to point B, society gains 40 dozen eggs at a "cost" of 200 cakes of soap, so the opportunity cost of a dozen eggs is 5 cakes of soap (200/40). Use this information to answer this set of questions. 3 tomatoes; C. 5 tomatoes; D. 8 tomatoes; E. the slope of the PPF; Correct Answer: A. Which of the following statements is TRUE? tonushka tonushka 29 minutes ago Economy Secondary School +5 pts. Get help with your Production–possibility frontier homework. 3. Increasing opportunity costs cause the PPF to be bowed out. The PPF for country 1 is 10A+30T=600 and country 2 is 30A+150T=1200 So the opportunity cost of T in country 1 is A=60-3T. Factors of production g. Products people desire to have 8. After you have finished the quiz, click on the Grade my Quiz button at the bottom of the page. Jess will agree to clean the bathroom only if Lena vacuums the living room. This is the answer we want. Solution for 5. These two opportunity costs are written in units of A given up for units of T. My question is, which country would specialize in T? Production Possibilities Curve as a model of a country's economy. Which of the following statements is TRUE? 5. Use the space below to answer the following question: ... the opportunity cost of increasing production of Good A from 0 units to 1 unit is the loss of _____ unit(s) of Good B. opportunity cost—choosing to do one thing prevents us from having the opportunity to do another. Comparative advantage and the gains from trade . PPF and Opportunity Cost: The table below provides information about the production possibility frontier for Economy Z. Practice: Opportunity cost and the PPC. Question: An Opportunity Cost: Multiple Choice Is An Unavoidable Cost Because It Remains The Same Regardless Of The Alternative Chosen Requires A Current Outlay Of Cash. Labour immobility f. Products that do not have an opportunity cost 7. b) 10 fish. Log in. I. Favourite answer. Although the concept of opportunity cost is funda› mental, incorrect conclusions can result from difficul› ties in applying the concept. Relevance. Academic year. of 1 wood =10/20 food= .5 food. Log in. I. And here's a quick question for you. Yes. He has over twenty years experience as Head of Economics at leading schools. 1. Examiners are keen that you understand the concept of opportunity cost in relation to the PPF. Using data in the table, graph the ppf (with carpet on the vertical axis) b. ekonomix. WHen you start production of a product, the average cost and marginal costs are very high. Opportunity cost h. Human made resources 9. PPCs for increasing, decreasing and constant opportunity cost. STRAIGHT LINE PPF AND CONSTANT OPPORTUNITY COST . Our online opportunity cost trivia quizzes can be adapted to suit your requirements for taking some of the top opportunity cost quizzes. Select the correct answer by clicking on the appropriate button. Join now. The answer is economic models. Think of Economies of scale. Examiners like testing the relationship between the shape of a PPF and the concept of opportunity cost. 1. 2. 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