Examkin

Soru

Zorluk: Çok zorProduction Possibility Curve (PPC)

An economy's production possibility frontier for agricultural produce (AA) and manufactured capital (MM) is represented by the non-linear equation A2+4M2=400A^2 + 4M^2 = 400, where both AA and MM are measured in thousands of units. If the economy is currently operating efficiently by producing 12 thousand units of agricultural produce, what is the opportunity cost (in thousands of units) of manufactured capital sacrificed if agricultural output is increased to 16 thousand units?

Cevap: 2 thousand units

Cevap

The opportunity cost of increasing agricultural produce from 12 to 16 thousand units is 2 thousand units of manufactured capital.
Substituting the initial agricultural output (A=12A = 12) into the equation A2+4M2=400A^2 + 4M^2 = 400 yields M=8M = 8 thousand units. Substituting the target agricultural output (A=16A = 16) yields M=6M = 6 thousand units. The opportunity cost incurred is the difference between the initial and new manufactured capital outputs (8−6=28 - 6 = 2 thousand units).

Adım Adım Çözüm

1
Calculate the initial quantity of manufactured capital produced.
Initial manufactured capital M1=8M_1 = 8 thousand units.
Substitute A=12A = 12 into the production possibility curve equation A2+4M2=400A^2 + 4M^2 = 400.
2
Calculate the new quantity of manufactured capital produced after increasing agricultural output.
New manufactured capital M2=6M_2 = 6 thousand units.
Substitute A=16A = 16 into the production possibility curve equation A2+4M2=400A^2 + 4M^2 = 400.
3
Determine the opportunity cost in terms of manufactured capital sacrificed.
Opportunity cost = 8−6=28 - 6 = 2 thousand units.
Opportunity cost measures the sacrifice of manufactured capital needed to gain additional agricultural produce along the PPC.

Anahtar Kavram

Opportunity Cost on a Non-Linear Production Possibility Curve
Bu soruyu puanla

Konular

Production Possibility Curve (PPC)

Bu konudan daha fazla soru