๐คAP Microeconomics
๐คAP Microeconomics
FRQ 1 โ Long
Unit 1: Basic Economic Concepts
Practice FRQ 1 of 191/19
1. The countries of Ashland and Borgia produce solar panels and electric scooters using equal amounts of resources. The table below shows the maximum annual output for each country if they use all their resources efficiently.
- Assume that the production possibilities curves for both countries are linear.
- The resources in both countries are identical.
Table 1
| Country | Solar Panels | Electric Scooters |
|---|---|---|
| Ashland | 80 | 40 |
| Borgia | 60 | 60 |
A. Using the data in Table 1, draw a correctly labeled graph of the production possibilities curve for Ashland, with solar panels on the vertical axis and electric scooters on the horizontal axis. Plot the numerical values of the intercepts.
B. Calculate the opportunity cost of producing one electric scooter in Ashland. Show your work.
C. Which country has the comparative advantage in the production of solar panels? Explain.
D. Identify a specific number of solar panels that could be traded for one electric scooter that would be mutually beneficial for both Ashland and Borgia.
E. Assume that Ashland develops a new technology that improves the efficiency of producing solar panels but has no effect on the production of electric scooters. On your graph in part A, show the effect of the new technology.
F. Assume that Ashland is currently producing 40 solar panels and 10 electric scooters. Is this production combination efficient, inefficient, or unattainable? Explain using numbers.
