Task: Economics for today by Tucker, 8th edition Chapter 1
Chapter 1 & 2 is Intro to economic way of thinking and production possibilities, opportunity cost and economic growth
Question 1: Assume that a research firm collects survey sales data that reveal the relationship between the possible selling prices of hamburgers and quantities of hamburgers consumers would purchase per year at alternative prices. The report states that if the price of a hamburger is $4, 20,000 will be bought. However at a price of $3, 40,000 hamburgers will be bought. At $2, 60,000 hamburgers will be bought and at $1, 80,000 hamburgers will be purchased.
Based on this data above describe the relevant relationship between the price of the burger vs the quantity consumers are willing to purchase, using a verbal statement, a numerical table and a graph. which model do you prefer and why?
Question 2: Which of the following decisions has the greater opportunity cost and why?
A: the decision to use an undeveloped lot in Tokyo's financial district for an apartment building
B: the decision to use a square mile in the desert for a gas station
Question 3: Following is a set of hypothetical production possibilities for a nation.
combination Autos (thousands) Beef (thousands of tons)
a 0 10
b 2 9
c 4 7
d 6 4
e 8 0
a. Plot these production possibilities data. What is the opportunity cost of the first 2,000 automobiles produced? Between which points is the opportunity cost per thousand automobiles highest? Between which points is the opportunity cost per thousand tons of beef highest?
b. Label a point F inside the curve, (having trouble understanding curves in step by step) Why is this an inefficient point? Label a point G outside the curve. Why is this point unattainable? Why are points A through E all efficient points?
c. Does this production possibilities curve reflect the law of increasing opportunity costs? Explain.
d. What assumptions could be changed to shift the production possibilities curve?