Suppose a Small Island Economy Uses Its Resources to Produce

question 42

Essay

Suppose a small island economy uses its resources to produce mangos and national parks for tourism. What shape would you expect this economy's production possibilities curve to have? _________________ Explain why.
If this economy is producing on its production possibilities frontier, but it is not producing the socially optimal combination of goods:
a) What type of efficiency is this economy definitely achieving? _____________________
b) What type of efficiency is this economy definitely not achieving? ____________________

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Definitions:

Balance Sheet

An account manifest that outlines an organization's assets, debts, and stockholders' equity at a particular time.

Accounts Receivable

Receivables from clients to a business for goods or services that have been dispatched but not settled.

Sales Salaries Payable

An account representing the salaries owed to sales staff that have been incurred but not yet paid.

Cash Payments

Refers to transactions where cash is paid out by the business, such as to suppliers, employees, or for other expenses.