Identify the elements of scarcity, choice, and opportunity cost in each of the following: 1. The manager of an automobile assembly plant is considering whether to produce cars or sport utility vehicles (SUVs) next month. Assume that the quantities of labor and other materials required would be the same for either type of production. 2. A young man who went to work as a nurses' aide after graduating from high school leaves his job to go to college, where he will obtain training as a registered nurse.
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- A small company that shovels sidewalks and driveways has 100 homes signed up for its services this winter. It can use various combinations of capital and labor: intensive labor with hand shovels, less labor with snow blowers, and still less labor with a pickup truck that has a snowplow on front. To summarize, the method Choices are: Method 1: 50 units of labor, 10 units of capital Method 2: 20 units of labor, 40 units of capital Method 3: 10 units of labor, 70 units of capital If hiring labor for the winter costs $100/unit and a unit of capital costs 400, what is the best production method? What method should the company use if the cost of labor rises to $20/unit?In the use of the resources, it is important to any the concept of opportunity cost . Define oportunity cost in economic termsThe table below shows the marginal benefit for various inputs. Assume that each level represents a $100 investment, and answer the following questions. (a) If you have an unlimited budget, how much would you spend on each input? Explain.(b) Now, assume you can spend a maximimum of $500. What would you spend on each inputnow? What order would you buy them in?(c) Finally, assume you can borrow as much as you want with an interest rate of 10%. How muchwill you borrow and how will you spend it if you have to pay back the loan within 1 year?
- a. Explain the following statement : "Surely, as you begin this course, you recognize that time is one of the scarcest resources of all. Your primary decision problem is to allocate a scarce resource -time- to achieve a goal-such as mastering the subject matter or earning an A in the course."The nation of Rougarou is able to produce turnips and potatoes in combinations represented by the data in the following table. Each number represents thousands of bushels. B E 90 0 10 B. Attainable and Efficient OC. Unattainable and Inefficient OD. Only Efficient OE Unattainable and Efficient A Turnips 100 Potatoes 0 OF. Attainable and Inefficient OG. Only Unattainable OH. Only Inefficient C 70 20 A production point that contained 70,000 bushels of Turnips and 30,000 bushels of Potatoes would be classified as: OA. Only Attainable D 40 30 40You rent a car for $29.95. The first 100 miles are free, but each mile thereafter costs 10 cents. You plan to drive it 200 miles. What is the marginal cost of driving the car beyond the first 100 free miles? O The marginal cost is $10.00 plus the cost of gas. O The marginal cost is whatever can be purchased with $29.95 plus $10.00. O The marginal cost is $29.95. The marginal cost is the cost of gas plus the initial payment.
- The marginal benefit of an additional beach towel is $8. The marginal cost of producing an additional beach towel is $12. If producers are not minimizing the average costs of production, then we can conclude beach towel production is neither allocatively nor productively efficient. beach towel production is allocatively efficient but not productively efficient O beach towel production is both allocatively and productively efficient. O beach towel production is not allocatively efficient but is productively efficient.Which of the following indifference curve the slope of the production possibilities frontire? A, Opportunity cost B, Marginal cost C, Indifference Curve D, Marginal ProductYou have only 20 hours per week to use for either study time or fun time. Suppose the relationship between study time, fun time, and grades is shown in this table: bartelby learn Fun time (hours per week) 20 18 14 8 0 Study time (hours per week) 0 2 6 12 20 Grade point average 0 1.0 2.0 3.0 4.0 a. Draw the (linear) production possibilities curve on the graph below that represents the alternative uses of your time. b. On the same graph, show the combination of study time and fun time that would get you a 2.0 grade point average. c. What is the cost, in lost fun time, of raising your grade point average from 2.0 to 3.0? ________hours of fun time d. What is the opportunity cost of increasing your grade point average from 3.0 to 4.0? ___________hours of fun time
- 3. The company that you manage has already spent $8 million on developing a new product – awebsite that combines You Tube, Twitter, and Facebook – called You Twit Face. Thedevelopment is not quite finished. It will cost an extra $2 million to finish development andcomplete the product. Assume that this $2 million amount includes the explicit costs and anyopportunity cost that the company may have. At a recent meeting, your salespeople report thatthe expected sales of your new product (if you finish) are $6 million total. If you do not finishdeveloping the product you can sell the incomplete product to another company for $2 million. What is the MC of finishing the development? __________________ What is the MB of finishing the development? __________________ Should you finish the product? Why or why not? Use the idea of “thinking at the margin” toexplain your answer. Need details explanationMeat (pounds) 120 A 90 D 60 В 30 Vegetables (pounds) 40 60 80 100 120 140 160 Point B is: O Infeasible Inconsistent Inconceivable O Inefficient 20For each of the following situations involving marginal cost (MC) and marginal benefit (MB), indicate whether it would be best to produce more, fewer, or the current number of units. a. 3,000 units at which MC = $10 and MB = $13: (Click to select) More Fewer Current number . b. 11 units at which MC = $4 and MB = $3: (Click to select) More Fewer Current number . c. 43,277 units at which MC = $99 and MB = $99: (Click to select) More Fewer Current number . d. 82 units at which MC < MB: (Click to select) More Fewer Current number . e. 5 units at which MB < MC