The endpoints of an economy's production possibilities frontier (PPF) for goods X and Y are: (2,000X, 0Y) and (0X, 500Y). Furthermore, the opportunity cost between these two goods is always constant. Which of the following combinations of the two goods, X and Y, lies on the economy's PPF?
What will be an ideal response?
1,000 units of X and 250 units of Y
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Suppose there are only two goods (bread and wine) and only two countries (England and Portugal). In England, the cost of producing 1 bottle of wine is 4 loaves of bread. What is the cost of producing 1 loaf of bread in England? Under what circumstances will England specialize in bread production and purchase its wine from Portugal? Explain.
What will be an ideal response?
We are assuming that returns to scale are
A) scalable. B) constant. C) increasing. D) zero.
A vertical demand curve
A) is impossible. B) reasonably represents demand for essential goods. C) has a price elasticity of negative infinity since people will pay an infinite amount for the good. D) represents a normal good.
Assuming a competitive world, does your country have an absolute advantage in making pizza? You can get your answer by
a. observing if your country makes more pizza than any other country b. calculating the costs of pizza ingredients in your country c. comparing pizza prices in other countries d. calculating the opportunity cost of a pizza in your country e. looking at your country's terms of trade