What is the Production Possibilities Model (PPM or sometimes, PPF) and how is this model related to the concept of opportunity cost
#1 The Production Possibilities Model (Professor)
What is the Production Possibilities Model (PPM or sometimes, PPF) and how is this model related to the concept of opportunity cost, as discussed in Chapter 2 of course textbook? Discuss the theory of comparative advantage and its relationship to the production possibility curve.
#2 Theory of Comparative Advantage (Professor)
Please discuss the theory of comparative advantage in trade. How is comparative advantage different from absolute advantage? Why might some of the precepts of the theory of comparative advantage fail to hold true in the modern era of international trade?
#3 Supply and Demand (Professor)
What is the difference between a movement along and a shift of the demand curve? What is the effect on the equilibrium price and quantity that results from an increase in demand, supply, and both? Provide examples for each instance. What is the role of supply and demand in decision making? Provide a real-world example.
Please discuss price elasticity of demand and the price elasticity of supply as delineated in Chapter 6 of the course textbook. Compare these concepts to income elasticity of demand and cross-price elasticity of demand. What factor is the most important determinant of the price elasticity of a good or service?
#5 Price Ceilings and Price Floors (Professor)
Please discuss price ceilings and price floors as delineated in Chapter 6 of the course textbook. What are some examples of both types of pricing schemes? What are some economic arguments both for and against these kinds of market interference?
#6 Consumer and Producer Surplus (Professor)
Please define consumer surplus as it is discussed in Chapter 7 of the course textbook. How is consumer surplus related to the concept of willingness to pay?
Please define producer surplus as it is discussed in Chapter 7 of the course textbook. Discuss how both consumer surplus and producer surplus are related to market efficiency and welfare economics
#7 Tariffs and International Trade (Professor)
What is a tariff as defined in Chapter 9 of the course textbook? What are the potential effects of implementing tariffs and how does this policy create winners and losers in international trade?
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This is a model based on scarcity and efficiency. Here, the concept of opportunity cost is used to decide on the most suitable economic practice. It is based on three assumptions; that all resources are put in place to maximize ability or capacity, resources are scare in nature and that technology does not and therefore is constant. Comparative advantage principle has application in the production possibility curve in that the main reason for countries to specialize is the difference in cost resulting from the variation in the amount of resources, their prices, and other factors of production (Hall, 2001). Therefore a country chooses to specialize in production of goods which it has comparative advantage.
Theory of comparative advantage.
The model of comparative advantage was first by David Ricardo. A country is said to possess a comparative advantage in production if it has the capacity to produce a good at comparatively lower opportunity to another country. The variation in countries’ ability to manufacture goods is what is referred to as absolute advantage…………………………………
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