Question

Using figure 1.3 on pg. 16:

If Alpha produced only cars, how many could they produce?

If Alpha produced only clothing, how much could they produce?

How many of each would they produce at point A?

What does point E represent?

What would have to happen to produce at point D?

Answer 1

car=80, clothes=430, at point a 70 car 300 clothes, Point E is balance(equilibrium) point, Point D allocate more resource for cloths and car equally

Explanation:

If they use all the resources for car and no cloths are produced we have to check the max value on the y axis at x=0, which is 80 cars.

If they use all the resources for clothes and no cars are produced we have to check the max value on the x axis at y=0, which is 430 cars.

At point A x (cloths)=300 and y(cars)=70

point show the balance(equilibrium) point between car and clothes production. It means that resources are equally used for car and cloths production.

To achieve point D (which is also equilibrium point)we have to allocate more resource for the production of cloths and cars equally.