Assignment 1: Opportunity Cost Analysis | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

GROUP ASSIGNMENT 1 Name: Nguyen Phuong Oanh Class: E-BBA 14.1 Exercise 1: Guided missiles (in thousands) 30 A 27 B H 21 C 12 G D E 0 2 4 6 8 Car(in millions)
a) From point A to B, B to C, C to D, D to E, the opportunity cost of increasing 2 million cars is
3, 6, 9, 12 thousand Guided missiles respectively.
From point E to D, D to C, C to B, B to A, the opportunity cost of increasing from 0 to 12, 12
to 21, 21 to 27, 27 to 30 thousand guided missiles is 2 million cars.
The opportunity costs for the production of missiles are increasing.
b) If the economy is currently at point C:
- From point C to D, the opportunity cost of 2 million cars is 9 thousand missiles
=> The opportunity cost of 1 million cars is 9/2 thousand missiles.
- From point C to B, the opportunity cost of 6 thousand missiles is 2 million cars
=> The opportunity cost of 1 thousand missiles is 2/6 = 1/3 million cars
c) Label a point G, which indicates quantity of Cars and Missiles is 4 million cars and 12
thousand guided missiles. It can produce the most missiles when produces 4 million cars is
21 thousand missiles. If it produces 12 thousand missiles, it can produce the most cars is 6
million cars. So, there always exist a quantity of cars or missiles is given up.
=> This means the economy is inefficient.
d) Label a point H lies outside the PPF curve, H indicates the impossible outcome of this economy.
- The economy can attain the level of production guided missiles indicated by point H only
when the availability of inputs increases for the economic outputs by transform inputs into outputs.
e) -When improvement occurs in the technology of producing guided missiles but not in the production of cars Guided missiles (in thousands) : Old PPF : New PPF 30 A 27 B H 21 C 12 G D E 0 2 4 6 8 Car(in millions)
-Technological improvement in the production of both products. : Old PPF : New PPF 30 A 27 B H 21 C 12 G D E 0 2 4 6 8 Car(in millions)