Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I m stuck on this question. Could you please show me how to solve step by step this question? Thanks in advance. 1) The world

I m stuck on this question. Could you please show me how to solve step by step this question? Thanks in advance.

1) The world production possibility frontier (PPF) is given by;

5000 = q2x+ 25q2y.

The utility function for the consumers is;

U=qxqy

I have calculated for you the point on the PPF at which the world will produce and

consume, which is qx = 25, qr = 10.

a) Draw the PPF, labeling three points with numerical values including (25,10).

Arithmetic tip: Sqrt5000 = 70.7.

b) Add to your graph to show what determines the point at which the world will produce and consume.

c) Show how we can learn the ratio of the price of the two goods from the graph.

d) What is the ratio of the prices of the two goods?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Survey Of Economics

Authors: Irvin B. Tucker

10th Edition

133711152X, 978-1337111522

More Books

Students also viewed these Economics questions

Question

What community placements are available for practica?

Answered: 1 week ago