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Chapter 2: Q 2.2 (page 27)
Explain why the scarcity problem causes people to consider opportunity costs and trade-offs among choices.
Because the problem of scarcity leads to choosing among alternatives and sacrificing one alternative for another.
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Consider a change in the table in Problems 2-6. The student鈥檚 set of opportunities is now as follows: Does the PPC illustrate the law of increasing additional cost? What is the opportunity cost to this student for the additional amount of study time on economics required to move her grade from 60 to 70? From 90 to 100?
| Economics | Biology |
| 100 | 40 |
| 90 | 50 |
| 80 | 60 |
| 70 | 70 |
| 60 | 80 |
| 50 | 90 |
| 40 | 100 |
The following table illustrates the points a student can earn on examinations in economics and biology if the student uses all available hours for study. Plot this student鈥檚 production possibilities curve. Does the PPC illustrate the law of increasing additional costs?
| Economics | Biology |
| 100 | 40 |
| 90 | 60 |
| 80 | 75 |
| 70 | 85 |
| 60 | 93 |
| 50 | 98 |
| 40 | 100 |
Senator Borman interjects the following comment after the statements by Senators Creighton and Long reported in Problems 2-10 and 2-11: 鈥淚n fact, both of my esteemed colleagues are wrong, because an unacceptably large portion of our nation鈥檚 resources is currently unemployed.鈥� Of the labeled points on the diagram, which one is consistent with Senator Borman鈥檚 position?
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.
If you receive a ticket to a concert at no charge, what, if anything, is your opportunity cost of attending the concert? How does your opportunity cost change if miserable weather on the night of the concert requires you to leave much earlier for the concert hall and greatly extends the time it takes to get home afterward?
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