5. There are two industries in a circular city. Each industry produces a good forexport and the export point is the center of the city. The price at the point ofexport is $15 per unit for the first good and $15 per unit for the second good.Transportation costs within the city are 50 cents per mile per unit for the firstgood, and 75 cents per mile per unit for the second good. Other costs (labor andcapital) are $8 per unit for the first good and $6 per unit for the second good.Firms produce 60 units of the first good and 80 units of the second good per unitof land. The land market is perfectly competitive, which implies that the users ofland bid enough to reduce their economic profits to zero. The agricultural bidrent is $30 at all locations.a. Find the bid rent curves for the two industries that correspond to zeroeconomic profits.b. Where do the first and second industries locate in the city? Show on a graph.

Given, Rent is defined as a surplus which results from advantages such as capitalization. It…

Answered: There are two industries in a circular…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1.The prairie dog has always been considered a problem for American cattle ranchers. They dig holes that cattle and horses can step in and they eat grass necessary for cattle. Recently, ranchers have discovered that there is a demand for prairie dogs as pets. In some areas prairie dogs can sell for as high as $150. Cattlemen are now fencing off prairie dog towns on their land so these towns will not be disturbed by their cattle.Draw a production possibilities frontier showing a rancher's production option between cattle production and prairie dog production showing increasing opportunity cost and show what would happen in each of the following situations. (Use a separate graph for each situation.)a. The outcome is efficient, with ranchers choosing to produce equal numbers of cattle and prairie dogs. b. As a protest against the government introducing the gray wolf back into the wild in their state, ranchers decide not to use 25% of the available grassland for grazing. c. The price of…
R Imagine that it costs $40 in the United States to produce one ton of soybeans and transport them to market, while it costs $30 in Brazil to produce one ton of soybeans and transport them to market Imagine that it costs $20,000 in the United States to produce one automobile and transport it to maket, while costs $10,000 in Brazil to produce one automobile and transport it to market. Which of the following four arrangements would be most efficient? (Hint: Derived OC from PPF (production) = 1/OC derived from costs to make ) a. The United States should produce everything, since it can produce both soybeans and automobiles better than Brazil can produce them. Ob. Brazil should specialize and produce only automobiles. The United States should specialize and produce only soybeans. Then the two countries should trade with each other. Brazil will send automobiles to the United States, while the United States sends soybeans to the Brazil. Oc. The United States should specialize and produce…
1. Consider a market of two farmers which are also consumers. The following table contains the maximum production levels over a time period of 8 hours for both wheat and wine. As usual, we assume linear production possibility frontiers. Farmer Wheat Wine 10kg 15kg Albert 21 Berta 11 (a) Identify absolute advantages for each good. (b) Identify comparative advantage. (c) How does the comparative advantage change when calculated over 1 hour of production time? (d) How should Albert and Berta specialise? Who will trade what? (e) Given their production and consumption before trade, Production/Consumption WVheat Wine Albert 5kg 7.5kg 11 Berta 0.51 Assume production changes to the following . 1
Wichita — Farmers in Kansas, the biggest US producerof wheat, are abandoning their crops damaged by severedrought and cold.Some are spraying wheat fields with crop-killingchemicals and claiming insurance payouts in the beliefthat it is not worth harvesting the little grain that thereis, Reuters found on a three-day tour of the state. Othergrowers let cattle graze on the dismal-looking fields.Abandoning fields will reduce the crop of the world’sfifth-largest wheat exporter, with stocks expected to fallto a 16-year low. Large-scale abandonment deals aneconomic blow to farm towns and force wheat buyersto adjust procurement plans by buying the staple grainelsewhere.Nationally, winter-wheat farmers plan to abandon 33%of the acres they planted, the highest percentage sinceWorld War 1, the US department of agriculture said ina May 12 report.Kansas farmers are expected to abandon about 19% ofthe area planted last autumn, up from 10% in 2022 and4% in 2021, according to the report. But farmers,…
Wichita — Farmers in Kansas, the biggest US producerof wheat, are abandoning their crops damaged by severedrought and cold.Some are spraying wheat fields with crop-killingchemicals and claiming insurance payouts in the beliefthat it is not worth harvesting the little grain that thereis, Reuters found on a three-day tour of the state. Othergrowers let cattle graze on the dismal-looking fields.Abandoning fields will reduce the crop of the world’sfifth-largest wheat exporter, with stocks expected to fallto a 16-year low. Large-scale abandonment deals aneconomic blow to farm towns and force wheat buyersto adjust procurement plans by buying the staple grainelsewhere.Nationally, winter-wheat farmers plan to abandon 33%of the acres they planted, the highest percentage sinceWorld War 1, the US department of agriculture said ina May 12 report.Kansas farmers are expected to abandon about 19% ofthe area planted last autumn, up from 10% in 2022 and4% in 2021, according to the report. But farmers,…
2. The prairie dog has always been considered a problem for American cattle ranchers. They dig holes that cattle and horses can step in and they eat grass necessary for cattle. Recently, ranchers have discovered that there is a demand for prairie dogs as pets. In some areas prairie dogs can sell for as high as $150. Cattlemen are now fencing off prairie dog towns on their land so these towns will not be disturbed by their cattle.Draw a production possibilities frontier showing a rancher's production option between cattle production and prairie dog production showing increasing opportunity cost and show what would happen in each of the following situations. (Use a separate graph for each situation.) a) The government grants new leases to ranchers, giving them 10,000 new acres of grassland each for grazing. b) A drought destroys most of the available grass for grazing of cattle, but not prairie dogs since they also eat plant roots.
Steel (millions of tons) 8 30 20- 10 0 Country A Production possibilition curve 10 20 30 40 Chemicals (millions of tons) From the diagrams, it can be seen that 50 Steel (millions of tons) 8 20 10 0 Country B Production possibilities curve 10 20 30 40 Chemicals (millions of tons) O the slopes of the two curves indicate both countries will specialize in chemicals. O country B has an absolute advantage in both commodities. O it is more costly in terms of resources to produce steel in country A. O country B has a comparative advantage in chemicals. O country A has a comparative advantage in both commodities. 50
|4. Help Samanthaville prioritize Using the chart below, graph a production possibilities frontier plotting Samanthaville’s points of efficiency. Place studying Economics Textbooks on the x-axis and piggy banks on the y-axis. Economics Textbooks Piggy Banks Hours 60 85 95 50 75 2 3 90 4 100 100 a) What are the 5 possible points of efficiency for Samanthaville? Create a production possibilities graphing these 5 points of efficiency. b) Evaluate the following statement: "Samanthaville should spend 2 hours making Economics Textbooks and 2 hours making Piggy Banks." Is this a positive or normative statement? Explain. c) What is Samanthaville's marginal opportunity cost making the 4th Econ Textbook? d) What is Samanthaville's marginal opportunity cost of making the 2nd Piggy Bank
BARLEY (Bushels) 120 108 96 84 72 60 48 36 24 12 0 0 60 120 180 240 300 300 420 480 540 600 ALFALFA (Bushels) has an absolute advantage in the production of alfalfa, and Darnell's opportunity cost of producing 1 bushel of barley is barley is bushels of alfalfa. Because Darnell has a comparative advantage in the production of barley, and -O Darnell's PPF Eleanor's PPF has an absolute advantage in the production of barley. bushels of alfalfa, whereas Eleanor's opportunity cost of producing 1 bushel of opportunity cost of producing barley than Eleanor, has a has a comparative advantage in the production of alfalfa.
5. Figure 1 shows the PPF between Caps (C) and scarves (S). Assume that Caps sell for $8 and scarves sell for $5. The maximum revenue that you can earn is you will produce and caps. Show your work on the figure and scarves Scarves 90 80 70 60 50 40 30 20 10 O Figure 1 5 10 15 20 25 30 35 40 45 50 55 60 Caps
8. Assume that the production of cement also produces a substantial amount of air pol- lution and that a technology is available that can lower the pollution but with some- what higher production costs for the cement. Because of the availability of raw materials in Lindertania, it produces large amounts of cement, and its exports supply most demand in Pugelovia. But the air pollution from Lindertania's production blows into Pugelovia, causing a noticeable deterioration in Pugelovia's air quality. Although Lindertania suffers some harm itself from this air pollution, it does not now have any policy to reduce the pollution. The Pugelovian government wants to address this air pollution problem. a. If the two countries' governments cooperate, what is the best solution to address the problem? Explain. b. If Pugelovia must come up with a solution on its own, what should the Pugelovian government do? Explain.
2. Comparative and absolute advantage Yakov and Ana are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa or barley or to produce alfalfa on some of the land and barley on the rest. Alfalfa Barley (Bushels per acre) (Bushels per acre) Yakov 20 Ana 28

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