Specialization and production possibilities Suppose Ireland produces only cars and trucks. The resources that are used in the production of these two goods are not specialized-that is, the same set of resources is equally useful in producing both trucks and cars. The shape of Ireland's production possibilities frontier (PPF) should reflect the fact that as Ireland produces more trucks and fewer cars, the opportunity cost of producing each additional truckincreases The following graphs show two possible PPFs for Ireland's economy: a straight-line PPF (PPFi) and a bowed-out PPF (PPF2)

3. saving two consumers, larry and jeff, have utility functions defined over the two periods of their lives: middle age (period zero) and retirement (period 1). they have the same income in period 0 of m dollars and they will not earn income in period 1. the interest rate they face is r. larry’s and jeff’s utility functions are as follow. = 0.5 + 0.5 and = 0.5 + 0.5 for each person is between zero and one and represents each consumer’s temporal discount econ 340: intermediate microeconomics. ben van kammen: purdue university. rate. a. write the budget constraint that applies to both jeff and larry in terms of consumption in each period and ), interest rate, and m. b. what is larry’s and what is jeff’s marginal rate of intertemporal substitution? c. what is the slope of the budget constraint? d. write each consumer’s condition for lifetime utility maximization. e. re-arrange the conditions from part (d) to solve for the ratio, . f. if > which consumer will save more of his middle age income? g. if > 1 1+ , in which period will larry consume more: = 0 or = 1?

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Which of the following is a benefit of a hat? it has a sports team logo on it. it makes the wearer look cool. it is red. it costs $12.