Simple homework economics prelim stuck. (1 Viewer)

[Brock1]

Help and explaination would be appreciated xD

 

[aoc]

for b) to produce the first 15 houses the clothing goes from 50 to 40. Therefore there had been a decrease of 10 clothing. As a result to produce the first 15 houses you had to forego 10 clothing.

c) To produce 15 houses you forego 10 clothing therefore the ratio is 15:10 if you simplify it you get 1:2/3

If someone could confirm if this is right that would be great because i kinda forgot if this is right myself

 

[Simorgh]

for b) to produce the first 15 houses the clothing goes from 50 to 40. Therefore there had been a decrease of 10 clothing. As a result to produce the first 15 houses you had to forego 10 clothing.

c) To produce 15 houses you forego 10 clothing therefore the ratio is 15:10 if you simplify it you get 1:2/3

If someone could confirm if this is right that would be great because i kinda forgot if this is right myself

For question b) wouldn't you have to do forgone clothes (10)/gained houses (15) to find out the opportunity cost, so basically 10/15=0.67? Thats the way my teacher told me to answer an opportunity cost question with that formula.

For question c) I never learnt about the marginal rate of substitution what exactly is it? How is it different to opportunity cost?

 

[BLIT2014]

For question b) wouldn't you have to do forgone clothes (10)/gained houses (15) to find out the opportunity cost, so basically 10/15=0.67? Thats the way my teacher told me to answer an opportunity cost question with that formula.

For question c) I never learnt about the marginal rate of substitution what exactly is it? How is it different to opportunity cost?

The marginal rate of substitution (MRS) can be defined as how many units of good x have to be given up in order to gain an extra unit of good y, while keeping the same level of utility.

E.g Change in x over Change in y.

It's linked with indifference curves, but I don't think you learn them in preliminary economics. It deals with the concepts of trade offs and ability to satisfy peoples wants and needs, given the fixed number of production possibilities.

 

[fnawabi98]

Sounds about right, but I don't thinks fractions go into ratios so 3:1 would be a better final solution

Um, wouldn't it be 3:2?

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[fnawabi98]

Whoops! Yeah, sorry. Don't know why I did that.

Hahaha, no it's cool, I just had a serious moment of self-doubt and needed to make sure.

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[aoc]

wait so is the opportunity cost 10 or 0.67 now im confused lol

 

[Orwell]

The opportunity cost is 10 mate.

 

[si2136]

The opportunity cost is 10 mate.

Should be F/G = 10 Clothing/15 Houses = 0.67 units of clothing per houses.

 

[BLIT2014]

Wait, so what's the difference between the opportunity cost and the marginal rate of substitution??? I'm confused..

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Opportunity cost represents the alternative use of resources. Often referred to as the ‘real’ cost, it represents the cost of satisfying one want over an alternative want.

 

[Orwell]

Should be F/G = 10 Clothing/15 Houses = 0.67 units of clothing per houses.

I was speaking in terms of the question, but correct.