2. Products that have an opportunity cost 6. Comparative advantage and the gains from trade . Join now. In Exhibit 2, plot and connect these points to create Athletic Country's production possibilities frontier. Have a go! Sort by: Top Voted. Practice Questions to accompany Mankiw & Taylor: Economics 2 a. Practice Questions 2 - Opportunity Cost and Trade Practice question with answers. b) 10 fish. tonushka tonushka 29 minutes ago Economy Secondary School +5 pts. If Athletic Country currently produces 100 bats and 400 rackets, what is the opportunity cost of an additional 100 bats? Production Possibilities Curve as a model of a country's economy. 1. Labour immobility f. Products that do not have an opportunity cost 7. 2017/2018 b) 10 fish. The opportunity cost of T in country 2 is A=40-5T. What happens to the opportunity cost of carpets measured in number of looms as carpet production increases from 0 to 10 Million yards, from 10 to 22 Million yards, from 20 to 30 Million yards, and so on? Answer the following questions with respect to the figure below (a) The opportunity cost of moving from point b to c is 10 units of butter. c) 5/10 fish d) 10/5 coconuts. Use this information to answer this set of questions. of 1 wood =10/20 food= .5 food. 2.…the opportunity cost of increasing production of Good A from 1 unit to 2 units is the loss of _____ unit(s) of Good B. 4 Answers. Think of Economies of scale. A comprehensive database of opportunity cost quizzes online, test your knowledge with opportunity cost quiz questions. Answer Save. Relevance. Select the correct answer by clicking on the appropriate button. 1 decade ago. 3 tomatoes; C. 5 tomatoes; D. 8 tomatoes; E. the slope of the PPF; Correct Answer: A. As you rproduce more, you … Maximum possible combinations of food and clothing that can be produced in a given period of time: Units of food (millions) Units of clothing (millions) 8.0 0.0 7.0 2.2 6.0 4.0 5.0 5.0 4.0 5.6 3.0 6.0 2.0 6.4 1.0 6.7 0.0 7.0 Draw a PPF for this economy. Yes. Explain briefly. opportunity cost—choosing to do one thing prevents us from having the opportunity to do another. Results From Past Managerial Decisions. Our online opportunity cost trivia quizzes can be adapted to suit your requirements for taking some of the top opportunity cost quizzes. Why does Opportunity Cost vary along a PPF Gradient? The PPF for country 1 is 10A+30T=600 and country 2 is 30A+150T=1200 So the opportunity cost of T in country 1 is A=60-3T. In fact, such a movement along the PPF illustrates one of the most important concepts in microeconomics we've already briefly touched upon, the concept known as opportunity cost. In economic terms, the negative slope is due to the presence of opportunity cost. She has 8 hours a… a. 2 tomatoes; B. And here's a quick question for you. a) 5 coconuts. Although the concept of opportunity cost is funda› mental, incorrect conclusions can result from difficul› ties in applying the concept. This short revision video looks at a PPF with diminishing returns (increasing marginal opportunity cost) and a linear PPF where the marginal opportunity cost is constant. These two opportunity costs are written in units of A given up for units of T. My question is, which country would specialize in T? Examiners are keen that you understand the concept of opportunity cost in relation to the PPF. I cannot work out why the opportunity cost varies along a gradient on a PPC/PPF. PPCs for increasing, decreasing and constant opportunity cost. The negative slope of the PPF illustrates the fact that larger quantities of cars correspond to a smaller amount of milk, and vice versa. Explanation: A When the seventh carrot is produced, production of tomatoes goes from 10 to 8, so the opportunity cost is 2 tomatoes. The following TWO questions refer the diagram below, which illustrates the PPF for a producer of two goods, x and y. This economy’s PPF is linear between each of the points given in the table (thus, the PPF is linear between points A and B, linear between points B and C, but not linear between points A and C). Think about what happens to the opportunity cost of TLs—measured in units of yoga lessons (“YL”)—as the amount of resources devoted to producing TLs increases. If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing. Based on the PPF in the figure, the opportunity cost of producing the seventh carrot is. Favourite answer. Production levels within the PPF are not attainable . Join now. Log in. The answer is economic models. University. 2. An insufficient quantity to satisfy everyone’s wants 10. Economic Principles (ECO10004) Uploaded by. Log in. But, opportunity cost usually will vary depending on the start and end points. 3. This happens because all the economy's resources are already in use, and therefore obtaining more cars would always require sacrificing some milk. Im looking through my book and i see that i have made a note on ppfs' i wrote that "to show rising opportunity cost we must assume maximum efficiancy plus factors of production are not perfectly reallocateable" and next to ithe ppf diagram i noted "we used the best facotrs first" I understand that it has to be max. Use the space below to answer the following question: ... the opportunity cost of increasing production of Good A from 0 units to 1 unit is the loss of _____ unit(s) of Good B. However, these costs are small compared to the value of the time it takes to attend class, do homework, etc. Which of the following statements is TRUE? Phelps to Olympians: 'Do what you can control' In leaked recording, Biden gripes about activist slogan This is the currently selected item. The following TWO questions refer the diagram below, which illustrates the PPF for a producer of two goods, x and y. Answered What is opportunity cost and PPF ?? These are examples of explicit costs, i.e., costs that require a money payment. Given the PPF illustrated, what is the opportunity cost of moving from B to A? Opportunity cost h. Human made resources 9. 1. Exhibit 7 b. This is the answer we want. Which of the following statements is TRUE? Jess will agree to clean the bathroom only if Lena vacuums the living room. Question: 96. Consider the question, “How much does it cost to go to college for a year?” We could add up the direct costs like tuition, books, school supplies, etc. I. As you can see, to move from point A to point B, society gains 40 dozen eggs at a "cost" of 200 cakes of soap, so the opportunity cost of a dozen eggs is 5 cakes of soap (200/40). 5. Next lesson. Swinburne University of Technology. Your score is neither recorded nor transmitted to your instructor. 2. 1 Answer to 1) A normal PPF exhibits ___ opportunity costs.zeroconstantdecreasingincreasing. a) 5 coconuts. Examiners like testing the relationship between the shape of a PPF and the concept of opportunity cost. Get help with your Production–possibility frontier homework. Directions This quiz contains 15 multiple choice questions. Dayne Lee. What do you think is the opportunity cost of moving from point B to C in terms of the butter given up to produce the extra guns? For the equation TL = 25000 - (YL)2 /1000 the derivative d(TL)/d(YL)— the amount of TLs you tradeoff by changing the number of YLs—is - (YL)/500. PPF and Opportunity Cost: The table below provides information about the production possibility frontier for Economy Z. Given the PPF illustrated, what is the opportunity cost of moving from B to A? Solution for 5. Quiz on the PPC, Opportunity Cost, and the Gains from Trade. STRAIGHT LINE PPF AND CONSTANT OPPORTUNITY COST . PPF and Opportunity cost questions. Lena hates to clean the bathroom. Quiz Questions and Answers: Opportunity Cost and PPF Lena and Jess are roommates. Practice: Opportunity cost and the PPC. If you always set up your information like this you can easily calculate the opportunity cost for any question. Opportunity cost and production possibilities Juanita is a skilled toy maker who is able to produce both trucks and puzzles. Image Transcriptionclose. Now divide both sides by 20 to get: The O.C. WHen you start production of a product, the average cost and marginal costs are very high. Academic year. Answer: Because Angela’s productivity in pot and mug production is constant – it doesn’t depend on how many mugs or pots she is making. Lesson summary: Opportunity cost and the PPC. In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). Course. Free goods j. Geoff Riley FRSA has been teaching Economics for over thirty years. A. For example, given a set of scarce resources, in order to produce additional “butter,” a society has to give up the opportunity to produce some “guns.” The opportunity cost of 20 wood is 10 food, or the OC of 20 wood = 10 food. c) 5/10 fish d) 10/5 coconuts. Practice Questions to accompany Mankiw & Taylor: Economics 2 d. Why is her production possibilities frontier a straight line instead of bowed out like those presented in Chapter 2? Economic goods i. Click here to get an answer to your question ️ what is opportunity cost and PPF ?? Question: An Opportunity Cost: Multiple Choice Is An Unavoidable Cost Because It Remains The Same Regardless Of The Alternative Chosen Requires A Current Outlay Of Cash. This question does precisely that! The basic economic problem is one rooted in both the natural world and in human greed. Factors of production g. Products people desire to have 8. Finally, a PPF has decreasing opportunity costs if the opportunity cost of a good gets smaller as more of it (this promotes specialization) and the PPF will be bowed in (like a crescent moon). Increasing opportunity costs cause the PPF to be bowed out. Lv 5. Using data in the table, graph the ppf (with carpet on the vertical axis) b. British study offers new insights on coronavirus in schools . Ask your question. Also known as PPC. c. Opportunity cost - to gain more of a good, something else must be given up. I. ekonomix. He has over twenty years experience as Head of Economics at leading schools. 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