Question
Question 2 Crab-apple Corp has a choice to make between building iwatches and Fitbits. The board of directors for Crab-apple must decide how many to
Question 2
Crab-apple Corp has a choice to make between building iwatches and Fitbits. The board of directors for Crab-apple must decide how many to produce of each product, as it has limited production facilities.
Now the board of directors must decide what combination is right.
- Use the table below and graph a Production
Possibilities curve on the graph below:
Production Possibilities Curve | |||||
# of iwatches | |||||
(000s) | |||||
# Fitbits | (000,000s) |
Possibilites # iwatches (000s) #Fitbits (000,000) |
A 0 75 |
B 1 50 |
C 2 30 |
D 3 15 |
E 4 5 |
F 5 0 |
b. On the graph above, label a point of underutilization (inefficiency) for the production of iwatches versus Fitbits. Call it Point A. Next, label a point of efficiency.
Call it Point B. Last, label a point that is now unattainable. Call it Point C.
c. Look at the table: To get one iWatch, how many Fitbits have to be given up (marginal cost)?
d. What is the marginal cost of 3 iWatches?
e. What is the marginal cost of 4 iWatches?
Question 3
Also referring to the production possibilities of producting iwatches versus Fitbits.
- Calculate the cost of increasing production of Fitbits from 0 to 5 units, as measured in the amount of iWatches that would need to be sacrificed.
- Calculate the cost of increasing production of Fitbits from 5 to 15 units, as measured in the amount of iWatches that would need to be sacrificed.
- Calculate the cost of increasing production of Fitbits from 50 to 75 units, as measured in the amount of iWatches that would need to be sacrificed.
- What happens to the opportunity cost as the production of iWatches increases? Illustrate with numbers.
Question 1:
Using P for the product market and F for the factor market, indicate the market in which the exchanges below
Are likely to occur (when using the Circular Flow Model):
_________1. An automobile dealer sells cars to a consumer.
__________2. An automobile manufacturer purchases dashboards from a firm.
__________3. The government contracts computer expertise from a an individual.
________ 4. Banks lend money to businesses.
_________ 5. A government employs new civil servants.
_______ _6. Households provide expertise to industry.
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