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Chapter 2: Q 1 (page 42)
How must the dollar values of the opportunity costs of time compare for a typical purchaser of a vehicle converted by Becker Automotive, Inc., versus commuters who do not purchase them? Explain briefly.
Nearly billion.
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Why do you suppose that economists have estimated the dollar value of the combined opportunity costs of time that U.S. commuters spend in gridlocked traffic to be in excess of billion per year? Explain your reasoning.
Evaluate why everyone, whether poor or affluent, faces the problem of scarcity.
A nation鈥檚 residents can allocate their scarce resources either to producing consumer goods or to producing human capital鈥攖hat is, providing themselves with training and education. The following table displays the production possibilities for this nation:
| Production Combination | Units of Consumer Goods | Units of Human Capital |
| A | 0 | 100 |
| B | 10 | 97 |
| C | 20 | 90 |
| D | 30 | 75 |
| E | 40 | 55 |
| F | 50 | 30 |
| G | 60 | 0 |
(a) Suppose that the nation鈥檚 residents currently produce combination A. What is the opportunity cost of increasing the production of consumption goods by 10 units? By 60 units?
(b) Does the law of increasing additional costs hold true for this nation? Why or why not?
You and a friend decide to spend \(100 each on concert tickets. Each of you alternatively could have spent the \)100 to purchase a textbook, a meal at a highly-rated local restaurant, or several Internet movie downloads. As you are on the way to the concert, your friend tells you that if she had not bought the concert ticket, she would have opted for a restaurant meal, and you reply that you otherwise would have downloaded movies. Identify the relevant opportunity costs for you and your friend for the concert tickets that you purchased. Explain briefly.
Construct a production possibilities curve for a nation facing increasing opportunity costs for producing food and video games. Show how the PPC
changes have given the following events.
(a) A new and better fertilizer is invented.
(b) Immigration occurs, and immigrants鈥� labor can be employed in both the agricultural sector and the video game sector.
(c) A new programming language is invented that is less costly to code and is more memory-efficient, enabling the use of smaller game cartridges.
(d) A heat wave and drought result in a 10 percent decrease in usable farmland.
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