Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to “Calculate,” you must show how you arrived at your final answer.

Zeetopia and Freshland are two small tropical islands that use the same amounts of resources to produce mangoes and coconuts as shown in the table below.

Coconuts (in tons) | Mangoes (in tons) | |

Zeetopia | 50 | 60 |

Freshland | 50 | 30 |

(a) Which island has an absolute advantage in producing coconuts? Explain.

(b) Which island has a comparative advantage in producing coconuts? Explain.

(c) Assume Zeetopia and Freshland decide to specialize according to their comparative advantages and 1 ton of coconuts is exchanged for 1 ton of mangoes. Are specialization and trade under these terms beneficial to both Zeetopia and Freshland? Explain.

(d) Assume the two islands experience constant opportunity costs in the production of the two products. Draw a correctly labeled graph illustrating Zeetopia’s and Freshland’s production possibilities, showing coconuts on the horizontal axis and mangoes on the vertical axis. Plot the numerical values from the table above on your graph.

(e) On your graph in part (d), show a combination of coconuts and mangoes, labeled as point X that is unattainable for Freshland but feasible and inefficient for Zeetopia.

nclude correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to “Calculate,” you must show how you arrived at your final answer.

Zeetopia and Freshland are two small tropical islands that use the same amounts of resources to produce mangoes and coconuts as shown in the table below.

Coconuts (in tons) | Mangoes (in tons) | |

Zeetopia | 50 | 60 |

Freshland | 50 | 30 |

(a) Which island has an absolute advantage in producing coconuts? Explain.

(b) Which island has a comparative advantage in producing coconuts? Explain.

(c) Assume Zeetopia and Freshland decide to specialize according to their comparative advantages and 1 ton of coconuts is exchanged for 1 ton of mangoes. Are specialization and trade under these terms beneficial to both Zeetopia and Freshland? Explain.

(d) Assume the two islands experience constant opportunity costs in the production of the two products. Draw a correctly labeled graph illustrating Zeetopia’s and Freshland’s production possibilities, showing coconuts on the horizontal axis and mangoes on the vertical axis. Plot the numerical values from the table above on your graph.

(e) On your graph in part (d), show a combination of coconuts and mangoes, labeled as point X that is unattainable for Freshland but feasible and inefficient for Zeetopia.

Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to “Calculate,” you must show how you arrived at your final answer.

Assume that apples are produced in a perfectly competitive market. Grande’s Orchard is a typical firm that grows and sells apples. Currently, Grande earns zero economic profit, and the market price of apples is $10 per bushel.

(a) Draw a correctly labeled graph showing Grande’s demand curve, average total cost curve, and marginal cost curve, and show the profit-maximizing quantity, labeled QG .

(b) Suppose an increase in the popularity of apple cider increases the demand for apples. How will the increase in the demand for apples affect Grande’s economic profit in the short run? Explain.

(c) What will happen to Grande’s economic profit in the long run? Explain.

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Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to “Calculate,” you must show how you arrived at your final answer.

Zeetopia and Freshland are two small tropical islands that use the same amounts of resources to produce mangoes and coconuts as shown in the table below.

Coconuts (in tons) | Mangoes (in tons) | |

Zeetopia | 50 | 60 |

Freshland | 50 | 30 |

(a) Which island has an absolute advantage in producing coconuts? Explain.

(b) Which island has a comparative advantage in producing coconuts? Explain.

(c) Assume Zeetopia and Freshland decide to specialize according to their comparative advantages and 1 ton of coconuts is exchanged for 1 ton of mangoes. Are specialization and trade under these terms beneficial to both Zeetopia and Freshland? Explain.

(d) Assume the two islands experience constant opportunity costs in the production of the two products. Draw a correctly labeled graph illustrating Zeetopia’s and Freshland’s production possibilities, showing coconuts on the horizontal axis and mangoes on the vertical axis. Plot the numerical values from the table above on your graph.

(e) On your graph in part (d), show a combination of coconuts and mangoes, labeled as point X that is unattainable for Freshland but feasible and inefficient for Zeetopia.

Quantity of Output | Total Cost |
---|---|

0 | $12 |

1 | $14 |

2 | $18 |

3 | $24 |

4 | $32 |

5 | $42 |

6 | $54 |

7 | $68 |

The table above shows the total cost function for a typical firm producing hats in a perfectly competitive market. The market price for hats is $9 per hat.

(a) Calculate the average variable cost of the fifth unit. Show your work.

(b) What is the firm’s profit-maximizing quantity of hats? Explain using marginal analysis.

(c) Draw a correctly labeled graph showing the firm’s demand and marginal cost curves, and show the profit-maximizing quantity of hats determined in part (b).

(d) If the rent of the building the firm occupies increases, what will happen to the firm’s profit-maximizing quantity of output in the short run? Explain.

The table below shows unemployment and labor force statistics for an economy.

Actual rate of unemployment | 3% |

Natural rate of unemployment | 4% |

Population of the country | 125 million |

Number of people employed | 97 million |

Number of people unemployed | 3 million |

Number of people employed part time | 5 million |

Number of discouraged workers | 2 million |

(c) Given the state of the economy described in the table, is actual real output less than, greater than, or equal to potential real output? Explain.

(d) Calculate what the cyclical unemployment rate would be if the actual rate of unemployment increased to 5 percent. Show your work.

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