Chapter 1 Problems

1. According to Figure 1.1, what is the opportunity cost of

increasing military output from OE to OG?
The opportunity cost would be D minus F of consumer goods.
5. According to Figure 1.3, what is the peace dividend that results
when military output is cut from M1 to M2?
Im assuming that there is a typo in the question and should be M2 to M1.
When the military output is cut from M2 to M1, then the output of
consumer goods is increased from C2 to C1.
8. In 2008 the dollar value of total output was roughly $40 billion in
North Korea and $930 billion in South Korea. South Korea devotes
2.7 percent of its output to defense. Using the data in Figure 1.4,
compute how much North Korea spends on its military. What
nation spends more, in absolute dollars?
North Korea spends about $5.92 billion dollars and South Korea spends
$25.11 billion dollars on military spending. South Korea spends much
more money than North Korea in absolute dollars.