Evaluate the cost of a food unit and a capital

Reference no: EM133714305

Question: 1. Upper Arrakis land is suitable for agriculture, and each of its 1,000 production units can produce five units of food or one unit of capital goods (tractors and trucks). Lower Arrakis has 1,500 units of production. However harsher conditions result in each production unit being able to produce only two units of food or one unit of capital goods. A) ???Draw the two countries production possibilities frontier. B) Lower Arrakis government stresses growth and therefore limits the food production to 2,400 units (1.6 units of food per units of production), how many capital units can it produce?

While Upper Arrakis free market forces result in 4,000 units of food (4 units of food per unit of production, higher standard of living) How many capital units are produced in Upper?

On section 'a' PPF, mark these two consumption points. C) ???Draw the world Production Possibilities Frontier without specialization; mark the combined consumption.

D) Evaluate the cost of a food unit and a capital unit (each in terms of the other product, as an opportunity cost), in both countries.

E) ???In which country will the food industry lobby (the lobby is concerned with domestic job and members profits) against opening trade, explain. Do the same for the capital goods industry lobby. Explain.

F) If free trade and specialization is allowed; Draw the new World Production Possibilities Frontier, and clearly mark the point of complete specialization.

Explain each country specialization at that point.

G) ???A WHO (World Health Organization) specialist recommends emphasis on improving the world population health. He argues that a minimum production of 7,000 food units is essential. What is the maximum number of Capital goods units that can be produced, and how will production be divided, how many production units are allocated to each task in any of the countries?

H) The World Bank analyst recommends a minimum of 700 capital goods units to ensure fast growth. How is production allocated to maximize the world food production

Reference no: EM133714305

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