Refer to Scenario 4 . Assume that the state originally spent one-half of its budget on schools and one-half on prisons
What was the production of schools and prisons? Could the same number be achieved after the price of producing prisons falls to $1.5 million and the price of producing schools rises to $2 million? Explain.
Production is five schools and two and one-half prisons. No, the same number of schools and prisons could not be built after the price of production changes. If the state continues to divide its budget equally, production would be two and one-half schools and three and one-third prisons. If the budget were juggled, the maximum number of schools that could be built is five, but no prisons could be built. And, if two and one-half prisons were built, there would be enough left in the budget to build just over three schools.
You might also like to view...
The cost to a physician of tending a patient is
A) dependent on the number of years over which the physician practices. B) higher for a recent medical-school graduate than for a physician with a well-established practice. C) the value of the time when spent in its next best use. D) zero under a system of complete and comprehensive medical insurance.
For economists, conducting experiments is often difficult and sometimes impossible
a. True b. False Indicate whether the statement is true or false