TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN
Viện Quản trị kinh doanh
Lớp EBBA 13.1
Kinh tế vi mô
Hồ Sĩ Minh – MSV: 11219093
Group assignment presentation 1
Exercise 1. Use the following production possibilities
table for war goods and civilian goods to answer questions
a to e.
Production alternatives
Type of
product
Cars (in
millions)
Guided missiles
(in
thousands)
A
B
C
D
E
0
2
4
6
8
30
27
21
12
0
a.
Graph the data in the table. Are there constant or increasing opportunity costs for
the production of missiles?
b.
If the economy is currently at point C:
- What is the cost of one million more cars?
- What is the cost of one thousand more guided missiles?
c.
Label a point G inside the curve of the graph. What does it indicate?
d.
Label a point H that lies outside the PPF curve.
- What does this point indicate?
- What must occur before the economy can attain the level of production indicated
by point H?
e.
Suppose improvement occurs in the technology of producing guided missiles but
not in the production of cars.
- Draw the new PPF curve on the graph you created.
- Now draw a curve that reflects technological improvement in the production of
both products.
Answer:
TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN
Viện Quản trị kinh doanh
Lớp EBBA 13.1
Kinh tế vi mô
Hồ Sĩ Minh – MSV: 11219093
a.Graph the data in the table:
Guided Missiles (in thousands)
35
A
30
Impossible
B
25
H
C
20
G
Inefficient
15
D
10
5
E
0
0
1
2
3
4
5
6
7
8
9
Cars (in millions)
The graph illustrates the opportunity costs for the production of missiles increases
for the following reasons:
- From E to D, While the economic reduces 2 million cars, there are 12 thousand
missiles produced. This means to produce one more thousand missiles, the
economy has to reduce the production of car, approximately 2: 12 ≈
0,1666 (in millions).
- From D to C, To produce one more thousand missiles, the economy has to reduce
the production of car, about 0,222 millions.
- From C to B. The opportunity cost for one more thousand missiles, in this case,
is similar to 0,333 million cars.
- From B to A, 2 million cars were reduced and 3 thousand missiles raised, the
opportunity cost for one more thousand missiles is nearly equal to 0,6666 million
cars.
b.
At point C:
- The cost of one million more cars is:
TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN
Viện Quản trị kinh doanh
Lớp EBBA 13.1
Kinh tế vi mô
Hồ Sĩ Minh – MSV: 11219093
9⁄2 = 4,5 (thousand missiles)
- The cost of one thousand more guided missiles is:
2⁄6 ≈ 0,333 (million cars)
c.
The G point indicates one production rate below the PPF curve. It’s show the
inefficiently of economy.
d.
- Point H indicates the impossible outcome with the fixed resource.
- There are may factors that can lead to point H’s level of production, such as the
production technology must me developed, the number of skilled labour must be
increased.
e.
- The green line indicates improvement occurs in the technology of producing guided
missiles but not in the production of cars.
- The yellow line indicates technological improvement in the production of both
products.
Exercise 2. Assume that a simple economy has 2 industries
which produce wheat and cloths. Resources to produce these
products are scarce and used effectively. The following
table represents the possible combinations of output
between wheat and cloths that this economy produces in a
given year.
Alternatives
Output of wheat
(tons)
Output of cloths
(1000 set)
A
B
C
D
E
25
20
15
9
0
0
4
7
9
10
a. Draw the production possibility frontier (PPF) curve for this economy
b. If output of wheat and cloths are 9 tons of wheat and 4000 set of cloths, what do
you think about productive efficiency of this economy?
c. Can this economy produce 20 tons of wheat and 10 000 set of cloths ?
TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN
Viện Quản trị kinh doanh
Lớp EBBA 13.1
Kinh tế vi mô
Hồ Sĩ Minh – MSV: 11219093
d. Calculate opportunity costs of producing wheat and cloths?
Answer:
a.
Output of cloths (1000 set)
12
E
N
10
D
8
C
6
M
B
4
2
A
0
0
5
10
15
20
25
30
Output of wheat
(tons)
b.
With 9 tons of wheat and 4000 sets of clothes, we can point out that the economy
would be impossible to reach that point.
c.
With 20 tons of wheat and 10000 sets of clothes, we can point out that the economic
efficiency has not reached the maximum yet.
d.
Output of wheat has the opportunity costs:
-
From E to D : (10 − 9)/(9 − 0) = 0.111
From D to C : (9 − 7)/(15 − 9) = 0.333
From C to B : (7 − 4)/(20 − 15) = 0.6
From B to A : (4 − 0)/(25 − 20) = 0.8
Output of cloths has the opportunity costs:
TRƯỜNG ĐẠI HỌC KINH TẾ QUỐC DÂN
Viện Quản trị kinh doanh
Lớp EBBA 13.1
-
Kinh tế vi mô
From A to B : (25 − 20)/(4 − 0) = 1.25
From B to C : (20 − 15)/(7 − 4) = 1.667
From C to D : (15 − 9)/(9 − 7) = 3
From D to E : (9 − 0)/(10 − 9) = 9
Hồ Sĩ Minh – MSV: 11219093