Chapter 2: Q 2.3 (page 27)
Discuss why obtaining increasing increments of any particular good typically entails giving up more and more units of other goods.
Because the to produce any one good we use the resources of the other good.
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Based on the information in Problems 2-15, should you and your roommate specialize in a particular task? Why? And if so, who should specialize in which task? Show how much labor time you save if you choose to “trade” an appropriate task with your roommate as opposed to doing it yourself.
Distinguish between absolute and comparative advantage.
A nation’s residents can allocate their scarce resources either to producing consumer goods or to producing human capital—that 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’s 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?
What must be true of the trade-off perceived by people who have multiple sex partners?
Suppose that in Fig 2-24, the nation with other wise the same background conditions as in Problem 2-23 currently has sufficient resources to produce combinations located along only the innermost production possibilities curve. If the nation produces no additional smartphones 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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