Thursday
August 21, 2014

Homework Help: economics

Posted by G on Friday, September 15, 2006 at 7:09am.

I really have to figure out the answers to these questions and i dont know where to start. I dont know how to draw the marginal benefit and marginal cost curves for this question.

a.Sketch a marginal benefit and marginal cost diagram, with “billions of units of security per month” on the horizontal axis and the marginal cost and marginal benefit, measured in “all other goods per unit of security” on the vertical axis. What is the relationship between this diagram and the production possibilities diagram to the right? What is the pre-9-11 efficient quantity of security services? How is this quantity determined?

b.How did the catastrophic events of 9-11 affect the marginal benefit and marginal cost diagram? (Hint: One of the curves shifted). Draw a diagram showing the post-9-11 marginal benefit and marginal cost diagram. What is the new efficient quantity of security services? How does this new point relate to the discussion in the Wall Street Journal article about the costs being imposed on the public from enhanced security?

The link to the ppf for this question is here:
img170.imageshack.us/img170/7894/ppfiq2.jpg



I see the web site you cited, it is a picture of a production possibilities frontier, with Security on the x axis and Everything Else on the y axis.
With this you can calculate the marginal cost curve, but little else.
How much Everything do you have to give up to get the first unit of Security. From your graph, you go from 41 units to 40 units; about 1 unit of Everything. Now, how much to get the second unit of Security. From your graph, about 5 units of Everything. Continue with each additional unit of Security. So now you have something to plot. It should be an upward sloping cost curve. Remember Opportunity Cost; the cost of more security is getting less of something else.

Now then, the figure says nothing about security benefits. That said, the marginal benefits curve should be a downward sloping curve. Where the curves cross (i.e, where the marginal cost = the marginal benefit) is the optimal point.

Generally speaking, 9-11 did not affect the production possibilities curve, so the marginal cost curve stays fixed. However, the perceived need for security increased. That is, the marginal value of security rose at each level of security production. That is, the marginal benefit curve shifted outward.


But how do i calculate the marginal benefit, i know that the marginal cost is the slope of the PPF and its upward sloping but how would i know how to calculate the marginal benefit and then draw the curve for it.


Yeah omg, i know, im doing the same assignment HELP SOMEONE!!

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