1)The graph below shows the joint PPF for Jewel and Mark whoproduce computer codes and app ideas. You are told that theopportunity cost for Jewel of producing one unit of computer codes(Good Y) is 3 app ideas (Good X).

Given this information and holding everything else constant,which of the following statements is true?

I. Mark's PPF can be written as Y = 80 ? (8/3)X.

II. Mark has the comparative advantage in the production ofcomputer codes.

III. Jewel has the absolute advantage in the production of appideas.

IV. Jewel' PPF can be written as X = 100 ? (1/3)Y.

a)Statements I and II are true.

b)Statements I, II and III are true.

c)Statements II and IV are true.

d)Statements I, III and IV are true.

2)Use the following graph for the next question. (Note:MSC=marginal social cost, MPC=marginal privatecost.)

You are told the equilibrium at point c has P=6, Q=2. Theexternal cost of production is constant (i.e. MSC and MPC areparallel). What is the externality cost per unit?

a)$2

b)$5

c)$6

d)$7

Transcribed Image Text:

Production of Computer Code 100 80 JOINT PPF 60 90 Graph is not drawn to scale Production of Apps Production of Computer Code 100 80 JOINT PPF 60 90 Graph is not drawn to scale Production of Apps

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