Aim for FiveMicroeconomics

Short free-response question

Robots or bread

  • Unit 1
  • 5 points
  • About 12 minutes

You can use a calculator on this question, just like on exam day.

A shorter question with a few lettered parts on one situation, often built on a table, a payoff matrix or a given or described graph. You make claims, explain them, calculate a value, or describe a labeled graph and show a change on it. On the exam: Questions 2 and 3 of 3 in Section II; 5 points each, a quarter of the section score each. About 12 minutes suggested for each. Four-function calculator allowed.

The question and its sources

The country of Tavora uses all of its resources fully and efficiently to produce only two goods, robots and bread. Its production possibilities curve (PPC) is a straight line.

Tavora's production possibilities curve

The graph has robots on the horizontal axis and loaves of bread (in thousands) on the vertical axis.

Tavora's PPC is a straight line that meets the bread axis at 200 thousand loaves (no robots) and the robot axis at 50 robots (no bread).

Source: Hypothetical scenario

Suggested time: 12 minutes

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Part (a)

1 point

Calculate Tavora's opportunity cost of producing one robot. Show your work.

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Part (b)

1 point

Explain why Tavora's opportunity cost of robots stays the same as it produces more robots.

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Part (c)

1 point

Tavora is currently producing 20 robots and 100 thousand loaves of bread. Is this combination efficient, inefficient, or unattainable? Explain using the PPC.

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Part (d)

1 point

Is the combination of 30 robots and 100 thousand loaves of bread attainable for Tavora with its current resources and technology? Explain.

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Part (e)

1 point

Robots are used to make other goods. Suppose Tavora chooses to produce more robots this year than it did last year. Explain how this choice is likely to affect Tavora's PPC in the future.

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