The price of wheat is $2. 00 per bushel and the price of barley $ 0. 80. Show the benefits to Fred from specialization. What should he specialize in? The 125 bushels of barley because even though it’s cheaper there are more of a supply and more people will by the cheaper product. He will make more money selling the barley in the end. People want the cheaper product and he has more of it so it will make more money then the wheat. 4. Given the following production possibilities curve: a. Does this production possibilities curve show increasing opportunity costs?
Explain. This shows increasing opportunity cost because there are alternatives that are not chosen. B. What is the opportunity cost of moving from points to point D? Explain. The opportunity cost of moving from point I to D is Xi’s inefficient and D is efficient. I there is no proper reading and D id 60 units Of food and shelter. C. What is the opportunity cost of moving from point C to point B? The opportunity cost from moving from point C to B is a decrease in food units but an increase in shelter units. D. Which of points A-E is the most efficient?
Explain. C and D are most efficient because it requires society to use the resources to their fullest extent. Chapter 3 5. What would be the effect of each of the following on the demand for Chevrolet in the United States? In each case, identify the responsible determinant of demand. A. The price of Fords plummets. If the price on Fords went down the demand for them would increase. The cheaper the product is the more people will want it. B. Consumers believe that the price of Chevrolet will rise next year.
If the price rises and the price of Ford is decreasing most likely the demand for Chevrolet will decrease and will lose out on customers because of Ford. C. The incomes of Americans rise. Well if this happens then they will go with the better car even if it’s more money. So Coverlet’s will have more of an increasing demand because American’s have more money to spend. D. The price of gasoline falls dramatically. If the price of gasoline dropped then there’s a chance people will go with Chevrolet because it’s a better car even though it’s more expensive.
But there’s a chance people will stay and save money with Ford because their cars are so cheap. 6. What would be the effect of each of the following on the supply of salsa in the United States? In each case, identify the responsible determinant of supply. A. Tomato prices skyrocket. We would have a lot of tomatoes because not as many people will be buying tomato’s if their prices raise a lot. B. Congress places a 26 percent tax on salsa. Most people will stop buying salsa or not as much. C. De Chardonnays introduces a new, faster vegetable chopper.
