May 2019 [o J 5. What is a production possibilities frontier? What is it good for? [10 points] M ex; 2015 [P] 5. Suppose that in an hour an American worker can produce 100 shirts or 2!] computers, while a Chinese worker can produce 100 shirts or 10 computers. If each country has 4 hours available, a] Graph the production possibilities frontier for the United States. [2 points] b] Suppose that without trade the labour in each country spend ha]f their time producing each good. Identify this point on your graph. [1 points] c] If these countries were open to trade, which country would export shirts? Explain. [2 points] [1] Assume that the two countries trade at a price of $5 per shirt and $30 per computer. Graph the budget Line for the United States. [2 points] e) Explain how both countries would benefit from trade. [2 points] December 2013 [B] 7'. Explain the concept of comparative advantage and use it to show why it is advantageous for countries to trade. [It] points] 8. Nortbistan contains EDD acres of agricultural land on which it can grow rice or peas. Each acre can yield either 4 pounds of rice or 3 pounds of peas annually. In neighbouring Southland, with 400 acres of crop land. the yields are 3 pounds of rice or 1 pound of peas per acre. a] Explain what is a production possibilities frontier. [2 points] b] Sketch and label the annual production possibilities frontier for both countries. [Place peas on the horizontal axis.) [3 points] c] Which product should each country specialize in and why? [2 points] [1] If the world market price of rice is $10 per pound and for peas is $20 per pound, demonstrate how Nortbistan is better off by trading. [3 points] December 2010 [P] 9. The labour force of ten persons in the tiny economy of Iamrock can produce only Rum and Coffee. Each worker is capable of producing either 3 gallons of rum or one pound of coffee per day. [2 points each] a] Sketch the economy's production possibilities frontier. b] Explain what it is showing. c] Is the combination of 7' gallons of rum and 7 pounds of coffee attainable? Is it efficient? What about 15 gallons of rum and 10 pounds of coffee? d] Suppose the neighbouring island of Cubeland is willing to sell each pound of its coffee for 11.\": gallons of rum. Sketch Iamrock's consumption possibilities. e) Given the option of trading with Cubeland. what should Jamrock produce and trade in order to attain the consumption of 15 gallons of rum and 10 pounds of coffee? May 2013 10. In the last few months, internal conict in Syria has negatively affected their oil production capacity, resulting in a sharp rise in the price of oil on the world market. a] Use the market model to illustrate what has happened in the oil market. [5 points] b] How and why have users of oil reacted to the developments in the oil market? Be sure to show and describe that reaction in your diagram of the market model. [3 points] c] Oil being currently the main source of energy production, what do you expect to happen in the oil market when cheap alternative energy sources, such as renewables, become more widely available? [2 points] December 2014 11. Explain and illustrate the concepts of consumer surplus and producer surplus. Why are these concepts important? [1E3I points] December 2011 12. The questions below relate to the market for pay parties. a] Sketch a demand and supply diagram to represent the market, indicating the equilibrium price and quantity. [3 points] 13] Explain what the demand curve is showing and why it slopes downward. [3 points]