+1-415-670-9189
info@expertsmind.com
Case study analysis about optimum resource allocation
Course:- Microeconomics
Length: Word count 548
Reference No.:- EM1324




Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Microeconomics

Question: Scenario-You have been hired as the economics adviser for the newly elected State Premier. On your first day, the Premier introduces you to the new Minister for Health and the Minister for Education and Training, and explains that your expertise is needed to settle a policy debate. The Minister for Education and Training wants to build 6 new technical schools to train new trades people to help solve the critical shortage of skilled workers.  The Minister for Health wants to establish 30 health clinics that provide specialised childhood, preventative and early intervention medical services to improve public health in disadvantaged communities.  The Premier asks you if this is possible.  You are unsure, and question whether the economy has the resources to do both. The Minister for Education and Training says he won't accept less than 5 new technical schools. The Minister for Health says she will agree to no less than 29 new clinics. The Premier says that this compromise of 5 facilities and 29 clinics seems fair.  You then calmly suggest that before a policy is announced, it might be worthwhile working out what is actually possible. Before the Cabinet Meeting at 10.00 am tomorrow morning, you have to write a report that answers the following

Questions:

 (a) Why might you suspect (even without evidence) that the economy might not be able to produce all the schools and clinics the Ministers want? What constraints are there on an economy's production?

(b) The Premier provides you with the following production possibilities data recording combinations of schools and clinics produced over past years.

 Technical Schools                 Health Clinics

0                                              30

1                                              29

2                                              27

3                                              23

4                                              18

5                                              10

6                                              0

Given this information, draw a production possibilities curve (PPC) for the economy, labelling the axes and each combination. Explain why the line is curved and not straight, with reference to the concept of opportunity cost. Were you right to suspect the economy could not produce 6 schools and 30 clinics at once?  Explain why. 

 (c)  Explain the concepts of efficiency and inefficiency in relation to the PPC. Consider the Minister for Education and Training and the Minister for Health's second choices of 5 schools and 29 clinics and mark it on your graph. Is this combination possible or efficient?  Explain.

(d) The Premier wants to improve all possible and efficient outcomes, to keep the people happy with the government.  He understands that this year's production is restricted, but next year he wants to provide both 6 schools and 30 clinics.  Describe two different changes in the economy that could make this possible.

 (e) Explain in just a few lines, if it were up to you, which combination of technical schools and health clinics you would choose to produce, and why. In terms of kinds of economic analysis, what makes your answer for (e) different to those for questions (a) to (d)?                                                                                                  Are other economists likely to agree with your analysis in parts (a) to (d)?  Are they likely to agree with your preferred choice in (e)? Explain. 




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Microeconomics) Materials
An asset for drilling was purchased and placed in service by a petrolium production company. it cost basis is $60,000 and it has an estimated MV of $12,000 at the end of an es
Describe how the ice cream industry fits the oligopoly model and, how does the government influences oligopolistic behavior and do oligopolists always compete on the basis of
Write an equation for the demand curve using P as the symbol for price and QD as the symbol for quantity demanded - What is the equilibrium price and quantity in this market?
Find the market demand for ice cream if Travis and Maya are the only two consumers in the market. (Remember, Travis' demand at P = 5 isn't -3, it's 0!) What is the price ela
A firm has a total cost function 3y^3-42y^2+200y+800Find the profit of the firm if output is zero and the profit maximizing quantity of output and profitin the short run for t
Draw a standard supply and demand diagram which shows the demand for new housing units that are purchased each month, and the supply of new units built and put on the market e
describe a single non-profit provider, describe a model that can be uses to predict the quantity of health care services provided. Identify the health economic issues of non
You are the manager of a firm that receives revenues of $40,000 per year from product X and $70,000 per year from product Y. The own price elasticity of demand for product X