Microeconomics and Trade Problem, Resource Scarcity and Linear Equations

Anonymous
timer Asked: Jan 23rd, 2021

Question Description

I'm working on a micro economics question and need support to help me learn.

You are a member of a team of economists working for the Highway Safety Division of the Ministry of Transportation in a Latin American country. Your primary objective in your work is to minimize the number of highway deaths.1 The total annual budget for highway safety is 10 million pesos. You have two means at your disposal to prevent highway deaths: the construction of guard-rails and the repairing of road surfaces. On average, the cost of guard-rails is 20 thousand pesos per mile. On average, the cost of road surface repairing is 10 thousand pesos per mile. 1. Given this information, construct a graph of all the different combinations of miles of guard-rail construction and miles of road surface repair you could achieve per year. In this graph, place road surface repair on the horizontal axis. 2. What is the maximum number of miles of guard-rail construction you could achieve per year? What is the maximum number of miles of road surface repair you could achieve per year? 3. What is the opportunity cost of road surface repair in terms of the number of miles of guard-rail construction forgone? What is the opportunity cost of guard-rail construction in terms of the number of miles of road surface repair forgone? What is the mathematical relationship between these two opportunity costs? 4. The Highway Safety Division has been collecting data for a number of years on the effectiveness of guard-rails and road surface repairs on lives saved. These data indicate that on average: 2 One mile of guard-rail construction saves 0.2 lives per year. One mile of road surface repair saves 0.1 lives per year. Pick four combinations of guard-rail construction and road surface repair on you graph from question 1, including the two endpoints. Calculate the number of lives you would save on average for each of these budget allocations. Does it matter how you allocate your budget between guard-rail construction and road surface repair? 1 Latin America has the highest rate of road fatalities in the world. 2 Clearly, there is no such thing as factions of a life, but safety policy is often conducted in terms of statistical lives. 2 5. Now suppose that, in contrast to question 4, your data indicate that: One mile of guard-rail construction saves 0.1 lives per year. One mile of road surface repair saves 0.1 lives per year. Use the same four combinations of guard-rail construction and road surface repair on your graph as you did in question 4. Calculate the number of lives you would save on average for each of these budget allocations. Does it matter how you allocate your budget in this new case? 6. Suppose your annual budge falls to 8 million pesos. Draw a new graph of all the different combinations of guard-rail construction and road surface repair you could administer. 7. In question 6, what is the new opportunity cost of road surface repair in term of the number of miles of guard-rail construction forgone? What is the opportunity cost of guard-rail construction in terms of the number of miles of road surface repair forgone? 8. Suppose your annual budget remains at 10 million pesos, but the cost of road surface repair rises to 20 thousand pesos per mile. Draw a new graph of all the different combinations of guard-rail construction and road surface repair you could administer. 9. In question 8, what is the new opportunity cost of road surface repair in term of the number of miles of guard-rail construction forgone? What is the opportunity cost of guard-rail construction in terms of the number of miles of road surface repair forgone? 10. Do changes in your budget affect opportunity costs? Do changes in the costs of safety strategies affect opportunity costs?

Unformatted Attachment Preview

ITRN 504- Microeconomics and Trade Problem Set #1 Resource Scarcity and Linear Equations You are a member of a team of economists working for the Highway Safety Division of the Ministry of Transportation in a Latin American country. Your primary objective in your work is to minimize the number of highway deaths.1 The total annual budget for highway safety is 10 million pesos. You have two means at your disposal to prevent highway deaths: the construction of guard-rails and the repairing of road surfaces. On average, the cost of guard-rails is 20 thousand pesos per mile. On average, the cost of road surface repairing is 10 thousand pesos per mile. 1. Given this information, construct a graph of all the different combinations of miles of guard-rail construction and miles of road surface repair you could achieve per year. In this graph, place road surface repair on the horizontal axis. 2. What is the maximum number of miles of guard-rail construction you could achieve per year? What is the maximum number of miles of road surface repair you could achieve per year? 3. What is the opportunity cost of road surface repair in terms of the number of miles of guard-rail construction forgone? What is the opportunity cost of guard-rail construction in terms of the number of miles of road surface repair forgone? What is the mathematical relationship between these two opportunity costs? 4. The Highway Safety Division has been collecting data for a number of years on the effectiveness of guard-rails and road surface repairs on lives saved. These data indicate that on average:2 One mile of guard-rail construction saves 0.2 lives per year. One mile of road surface repair saves 0.1 lives per year. Pick four combinations of guard-rail construction and road surface repair on you graph from question 1, including the two endpoints. Calculate the number of lives you would save on average for each of these budget allocations. Does it matter how you allocate your budget between guard-rail construction and road surface repair? 1 Latin America has the highest rate of road fatalities in the world. Clearly, there is no such thing as factions of a life, but safety policy is often conducted in terms of statistical lives. 2 1 5. Now suppose that, in contrast to question 4, your data indicate that: One mile of guard-rail construction saves 0.1 lives per year. One mile of road surface repair saves 0.1 lives per year. Use the same four combinations of guard-rail construction and road surface repair on your graph as you did in question 4. Calculate the number of lives you would save on average for each of these budget allocations. Does it matter how you allocate your budget in this new case? 6. Suppose your annual budge falls to 8 million pesos. Draw a new graph of all the different combinations of guard-rail construction and road surface repair you could administer. 7. In question 6, what is the new opportunity cost of road surface repair in term of the number of miles of guard-rail construction forgone? What is the opportunity cost of guard-rail construction in terms of the number of miles of road surface repair forgone? 8. Suppose your annual budget remains at 10 million pesos, but the cost of road surface repair rises to 20 thousand pesos per mile. Draw a new graph of all the different combinations of guard-rail construction and road surface repair you could administer. 9. In question 8, what is the new opportunity cost of road surface repair in term of the number of miles of guard-rail construction forgone? What is the opportunity cost of guard-rail construction in terms of the number of miles of road surface repair forgone? 10. Do changes in your budget affect opportunity costs? Do changes in the costs of safety strategies affect opportunity costs? 2 ...
Student has agreed that all tutoring, explanations, and answers provided by the tutor will be used to help in the learning process and in accordance with Studypool's honor code & terms of service.

This question has not been answered.

Create a free account to get help with this and any other question!

Similar Questions
Related Tags

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors