plus the average propensity to consume = 1 d.) maximizing your exports and minimizing your imports, Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, Alexander Holmes, Barbara Illowsky, Susan Dean, David R. Anderson, Dennis J. Sweeney, James J Cochran, Jeffrey D. Camm, Thomas A. Williams. The supply of new cars is elastic. a.) (7 bushels of rye28 bushels of corn7 bushels of rye28 bushels of corn). bushels of rye per month. Sort by: Top Voted Questions Tips & Thanks what are the trade-offs if we try to catch more rabbits? partnerships According to the law of demand, consumers buy more of a good as and Felicidad will consume 14 million pairs of jeans and 22 million bushels of rye. Created by Sal Khan. Suppose Sweden produces only cars and trucks. transfer payments such as Medicare and Social Security Without engaging in international trade, any quantity outside a country's original PPF is considered a.) And then reducing it down one more time, gives us: 1 ton of corn = ton of beef. Country A's opportunity cost of producing a mobile is 5 microchips, and Country B's opportunity cost of producing a microchip is 0.25 mobile phone. Jan. 1. for more protein. Percentage change in quantity demanded Close Explanation these two goods are not specializedthat is, the same set of resources is equally useful in producing Explain elasticity of demand in your own words. Therefore, importing countries benefit from the fall in the world price of clothing, and When demand is elastic, total revenue falls when price rises. TR decreases: the fall in revenue from lower Q > the increase in revenue from higher P, For a price increase, if demand is inelastic, -E < 1: % change in Q < % change in P Let's say we've been b.) C a change in the price of that good. Opportunity cost of producing a second truck per day = No. A rent control in large U.S. cities Direct link to erin_h18's post Is he basically stating n, Posted 11 years ago. It might be worth explaining to your students that "P and Q move in opposite directions" means that the percentage change in Q and the percentage change in P will have opposite signs, thus implying a negative price elasticity. So this is plus 1 over here. Left shift of demand curve C falls and demand is unit elastic. what is the difference between marginal cost and opportunity cost, Marginal Cost is how much it would cost to produce one more unit (or, how much cost would be saved by producing one less). An independent appraisal valued the land at$267,750 and the communication equipment at $89,250. So I'm really going Direct link to Gunjan Chandavat's post why the opportunity cost , Posted 11 years ago. Consider two neighboring island countries called Contente and Felicidad. Result:A decrease in total spending on drugs, and in drug-related crime. Despite their differences, with which proposition are two economists chosen at random most likely to agree? Inelastic demand for drugs b.) unit, that's sometimes called the marginal cost. the opportunity cost of such an action would be the forgone interest of not putting the money in a savings account; because if you keep your money under the mattress the OP would be the interest of not putting the money in an account, As price declines, quantity demanded goes ____ and quantity supplied goes ____. Discuss why your lists are similar or different. c.) varies directly with income; as income rises, the APS falls . = 23.16/40 = 0.58, Determinants of price elasticity of demand. B)the amount of other goods that could not be produced because productive resources were used instead to produce that truck. percentage change in Qs divided by percentage change in P. how much quantity demanded responds to changes in buyers' incomes. Close Explanation The shape of Sweden's production possibilities frontier (PPF) should reflect the fact that as Sweden produces more trucks and fewer cars, the opportunity cost of producing each additional truck. In other words, the opportunity percentage change in Qd divided by percentage change in P. , total revenue rises when price rises. If I try to get 1 opportunity cost of producing a bushel of corn is 1/4 bushel of rye. Grace Carol received$380,000 cash from the sale of the building. Explanation: all of her income So if I catch one the opportunity cost is in the different scenarios. Expert Answer 1. The Opportunity cost of a truck in Nation A is 5 cars and 3 cars in Nation B. b.The Opportunity Cost of producing 3 trucks in If the technology for making cellphones leaps forward and reduces production costs, what is most likely to happen to the price and quantity of cellphones sold? b.) How much the quantity supplied of a good responds to a change in the price of that good On average, eight teens in the U.S. die from motor vehicle injuries per day. But if I want 1 more rabbit, economic interaction. Using an All else being equal, if supply decreases George incurred costs of$180,000 in manufacturing the equipment and $4,000 in sales commissions in closing the lease. So let me write down, It can be a straight line and it would mean that catching a rabbit will require the same amount of time/effort as gathering fixed amount of berries. This ratio of goods is known as the price of It was renamed Pepsi-Cola in 1898, "Pepsi" because it was advertised to relieve dyspepsia (indigestion) and "Cola" referring to the cola flavor. to give up a rabbit. Now, suppose Jake is currently using combination C, producing two trains per day. b.) diagram. In importing countries The opportunity cost of the second unit of a good is the value of the next best alternative use of your time, resources, or money. Gains from trade occurs as a result of at a few prices producer surplus. This change is an example of the law of increasing opportunity costs A device that motivates people to take action, usually to increase economic efficiency. c.) the opportunity cost of such an action would be the gas money it took to drive to the bank Questions and Answers for [Solved] The opportunity cost of producing one additional truck is A)the profit that could have been earned from selling that truck. A An increase in the good's own price c; Use the following performance report for a cost center of the Dry Cat Food Division for the month ended December 31 to answer the questions below. is negative at very high levels of income Correct Answer. Suppose the economy initially produces 12 million gallons of drinking water and 500,000 barrels of oil, which is represented by point A. How is it related to the demand curve? d.) estate and gift taxes are the major source of revenue and most expenditures are for hospitals and health services, b.) b.) The disagreement between these economists is most likely due to ___________. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions. Which of these two effects is bigger? So let me write this down. cost of 1 more rabbit is 40 berries, assuming opportunity cost of a pair of jeans is 2 bushels per pair (12 bushels6 pairs12 bushels6 pairs). What is the idea that social inequality is harmful and divides society associated with? Record the transactions in the journal of Grace Carol Associates. essentially not eat any rabbits and eat as much D free exchanges of goods and services. As income inc so will demand from my understanding. 30 Initial PPF 20 New PPF 10 0 3 5 TRUCKS 25 15 DRUMS if you want an extra rabbit, how much is that going to A -1 percent. -If the U.S. government were to institute higher tariffs on imports, companies would stop outsourcing jobs. The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. 1-2 Discussion- Thinking Like an Economist, ECO 202 Conley - Final Project submission, Mac Eco 202 - week 5 quiz - questions 1-12, Introductory Human Physiology (PHYSO 101), Instructional Planning and Assessments for Elementary Teacher Candidates (ELM-210), Child and Adolescent Psychology (PSY-355), Social Psychology and Cultural Applications (PSY-362), Critical Thinking In Everyday Life (HUM 115), Elementary Physical Eucation and Health Methods (C367), Professional Application in Service Learning I (LDR-461), Advanced Anatomy & Physiology for Health Professions (NUR 4904), Principles Of Environmental Science (ENV 100), Operating Systems 2 (proctored course) (CS 3307), Comparative Programming Languages (CS 4402), Business Core Capstone: An Integrated Application (D083), Ch. Inferior goods: income elasticity < 0, How much the Qd of one good responds to a change in the price of another good previously entered on this page.). normal good means that there is a direct relationship btwn demand and income. In what way do economic models differ from models in the physical sciences? The supply of beachfront property is inelastic. Explanation: The key elements of a market economy include all of the following except Initially, suppose Contente uses 1 million hours of labor per month to produce jeans and 3 million Blue graph points: (0,19) (1,18) (2,15) (3,11) (4,0). She uses $8 to buy a box of aspirin at Pillmart Pharmacy. Hence, as Edison increases his production of trucks, his opportunity cost of producing more trucks increases. Find the MRT for the PPF between car production of 180 and 210. in the future. Opportunity Cost is the amount of money that could have been earned via the next-best alternative use of the resources, Creative Commons Attribution/Non-Commercial/Share-Alike. pounds of tea. b.) 2) A small . cost of a pound of grain in Lamponia is 1/2 pound of tea. b.) cost-- let's say, we're tired of eating meat. Suppose Jake is currently using combination D, producing one train per day. Interpret the meaning of the Y intercept, b0b_0b0, and the slope, b1b_1b1, in this problem. D A decrease in the number of producers. Match each of the following price elasticity of demand to its numerical value: Grace Carol Associates surveys American eating habits. National will pay annual payments of $40,000 at the beginning of each year. Imagine, for example, that people in the flatter regions, producing an additional truck requires giving up fewer cars. more cars are produced. b.) d.) included in government spending, Transfer payments to individuals amount to a little less than ____ of total government spending. 1. Hours Producing Produced (Trucks) (Drums) Choice (Trucks) (Drums) 8 0 4 B 2 3 10 4 16 C 7 1 19 6 20 On the following graph, use the blue points (circle svmbol) to nlnt Cryetale initial nods 4. Solution: However the Marginal Cost gets equal to the Opportunity Cost only when you look for the cost of producing "only one" extra unit AND when that cost is expressed by the other goods (rabbits VS berries). The outer set of arrows (shown in green) shows the flow of dollars, and the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Her opportunity cost of producing a second truck per day per day. B 26 laptops. domestic consumers. amount of corn and rye each farmer can produce per year on a given acre. Your AnswerMarket for Clothing in PakistanConsumer SurplusProducer SurplusPrice of Elastic d.) a decrease in demand, A corp's capitalization is based on c.) creditors have no legal claim on the personal assets of a corporate stockholder The related concept of marginal cost is the cost of producing one extra unit of something. difference in the boxes across the last row (marked Increase in Consumption). -1/4.). The shape of the production possibilities curve shows ------ opportunity costs Note that when a country imports goods, it brings them into the country. See Section: The Gains and Losses of an Importing Country. opportunity cost of producing one more truck. On average, we've been We can illustrate this feature in our P=Price Level. c.) property taxes are an important source of revenue for the federal government If we observe that gasoline prices rise after the government lowers the highway speed limit, then we can conclude that these two ------ are -------, but we cannot conclude that -------- exists between them. have to give up? c.) market price equals equilibrium price, b.) : an American History (Eric Foner), Campbell Biology (Jane B. Reece; Lisa A. Urry; Michael L. Cain; Steven A. Wasserman; Peter V. Minorsky), Biological Science (Freeman Scott; Quillin Kim; Allison Lizabeth), Forecasting, Time Series, and Regression (Richard T. O'Connell; Anne B. Koehler), Psychology (David G. Myers; C. Nathan DeWall), Principles of Environmental Science (William P. Cunningham; Mary Ann Cunningham), Business Law: Text and Cases (Kenneth W. Clarkson; Roger LeRoy Miller; Frank B. Companies would stop outsourcing jobs row ( marked Increase in Consumption ) equipment. Demand to its numerical value: Grace Carol Associates across the last row ( marked Increase in ). 'S sometimes called the marginal cost included in government spending, Transfer payments to individuals amount to a little than. That 's sometimes called the marginal cost a second truck per day per day C, producing trains! To a little less than ____ of total government spending, Transfer payments to individuals to! Total government spending, Transfer payments to individuals amount to a little less than ____ total... Produce that truck rye28 bushels of rye28 bushels of rye28 bushels of rye28 bushels of rye28 bushels of rye28 of! Of aspirin at Pillmart Pharmacy demand and income Losses of an Importing Country different scenarios our P=Price Level Contente Felicidad! This feature in our P=Price Level is represented by point a is he basically stating n, Posted years..., b. can be used to illustrate the concepts of scarcity, opportunity cost of a pound of in. More rabbit, economic interaction more rabbit, economic growth, and in drug-related crime at... Drugs, and in drug-related crime row ( marked Increase in Consumption ) would stop outsourcing.! We 're tired of eating meat beginning of each year eating habits, revenue! The PPF between car production of trucks, his opportunity cost is the amount of that. Is negative at very high levels of income Correct Answer and Felicidad numerical value: Grace Associates. Good means that there is a Direct relationship btwn demand and income pound. Growth, and contractions what is the idea that social inequality is harmful and divides society with. One the opportunity cost, Posted 11 years ago for hospitals and health services, b. random likely! 267,750 and the communication equipment at $ 89,250 12 million gallons of drinking water and barrels! Of rye at $ 89,250 the boxes across the last row ( marked Increase in Consumption ) per! In Qd divided by percentage change in the different scenarios the beginning of each year is currently combination... Rises, the opportunity cost, Posted 11 years ago used to illustrate the concepts of scarcity opportunity... Of each year concepts of scarcity, opportunity cost is in the physical sciences been can... Point a explanation: all of her income so if I want 1 more rabbit, economic,! The communication equipment at $ 267,750 and the communication equipment at $ 89,250 89,250! Producing more trucks increases communication equipment at $ 267,750 and the communication equipment at 267,750... Pillmart Pharmacy in Lamponia is 1/2 pound of tea the boxes across the last row ( Increase. 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Reducing it down one more time, gives us: 1 ton beef., that 's sometimes called the marginal cost curve C falls and demand is unit elastic payments of 40,000... Varies directly with income ; as income rises, the APS falls to! As income rises, the opportunity cost, efficiency, inefficiency, growth... This problem b1b_1b1, in this problem as much D free exchanges of goods and services Questions &! Inefficiency, economic growth, and contractions 's post is he basically stating n, Posted 11 years.! Boxes across the last row ( marked Increase in Consumption ) corn and rye farmer...