Chapter 2: Q 2.1 (page 27)
Evaluate why everyone, whether poor or affluent, faces the problem of scarcity.
Whether a person is poor or affluent everyone faces the problem of scarcity because human wants are unlimited and the resources are limited.
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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’s 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 |
Why might the production possibilities curve relating the number of electronic-gadget-accessory boxes at passenger seats to the quantity of seats on a plane be bowed? Explain your reasoning.
You can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. Your roommate can wash, fold, and iron a basket of laun-
dry in three hours and prepare a meal in one hour. Who has the absolute advantage in laundry, and who has an absolute advantage in meal preparation? Who has the comparative advantage in laundry, and who has a comparative advantage in meal preparation?
Suppose that in Fig 2-2, the nation currently is producing combination D in the table and on the graph of the production possibilities curve. What is the opportunity cost of producing 20 million more tablet devices and moving to production combination F?
Suppose that in Fig 2-4, the nation currently has sufficient resources to produce combinations located along only the innermost production possibilities curve. In addition, suppose that the nation's residents have determined that smartphones function mainly as consumption goods while tablet devices function primarily as capital goods. If the nation produces no additional tablets this year, will the intermediate-shifted PPC resulting from minimal economic growth or the farthest shifted PPC caused by more significant economic growth be more likely to apply next year?
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