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Economics 12th Edition Arnold Solutions Manual
Economics 12th Edition Arnold Solutions Manual
Solutions Manual
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Economics 12th Edition Arnold Solutions Manual
CHAPTER 2
Production Possibilities Frontier Framework
Chapter 2 introduces the basics of the PPF, comparative advantage, and trade. This is not
exactly a “tools of economics” chapter; instead it explores basic premises that underlie the
economic analysis presented throughout the text.
KEY IDEAS
1. The PPF is a framework used to examine production.
2. The PPF can be used to demonstrate several economic concepts.
3. Individuals can make themselves better off by specializing in production according to
their comparative advantages, and then trading for other goods.
CHAPTER OUTLINE
I. THE PRODUCTION POSSIBILITIES FRONTIER
The law of increasing opportunity costs holds because people have varying
abilities, so they aren’t equally adept at producing all goods. The law of
increasing opportunity costs suggests that fFor most goods, the opportunity costs
increase as more of the good is produced.
21
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
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or posted to a publicly accessible website, in whole or in part
The PPF can be used to illustrate seven economic concepts: choice, opportunity
costs, productive inefficiency, and the four discussed in this section:
1. Scarcity
The PPF separates two regions: an attainable region, which consists of the
points on the PPF and all points below it, and an unattainable region, which
consists of all points above and beyond the PPF. Within the attainable region,
individuals must choose which combination of goods they want to produce. There
is an opportunity cost associated with each choice whenever there is a
movement along a PPF.
2. Productive Efficiency
3. Unemployed Resources
One reason that an economy may exhibit productive inefficiency is that it is not
using all its resources.
4. Economic Growth
A country that specializes in the production of certain goods, and then trades those
goods to countries for other goods, can make itself better off.
What holds for individuals holds for countries too. For example, if both Americans
and Brazilians specialize in producing those goods for which they have a
comparative advantage, and then trade some of those goods for the others’
goods, both Americans and Brazilians can consume more of both goods than if
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.© 2014 Cengage Learning. All
Rights Reserved. May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
Production Possibilities Frontier Framework 23
TEACHING ADVICE
1. One of the most important things that students can learn from studying the production
possibilities frontier is that choices have consequences. Emphasize that when we
choose to produce at one point rather than at some other point on the PPF, we obtain
more of one good than we would have had at the other point, but we don’t get to have as
much of the other good as we would have had at the other point. Use the Production
Possibilities Frontier Exercise (presented below as a sheet that can easily be
reproduced for students) to reinforce this point and the point that the law of increasing
opportunity cost holds.
2. Go to www.bls.gov and, on the right side of the screen, click on the historical data link for
unemployment rates. Use this data to show how recent changes in unemployment rates
have affected our position relative to the PPF (ceteris paribus, increases in the
unemployment rate do not affect the position of our nation’s PPF, but, rather how close
to the PPF we can operate).
Assignment 2.2
Key Idea: The PPF can be used to demonstrate several economic concepts.
1. Explain how the PPF is used to demonstrate scarcity.
2. Use the PPF to demonstrate choice and opportunity cost.
3. Define productive efficiency and use the PPF to demonstrate it.
4. Use the PPF to show unemployment.
5. Use PPF curves to show economic growth and list the sources of economic growth.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a
license distributed with a certain product or service or otherwise on a password-protected website for classroom use.© 2014 Cengage Learning. All
Rights Reserved. May not be scanned, copied or duplicated,
or posted to a publicly accessible website, in whole or in part.
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“I promise on my word of honor,” replied Harcourt, in
amazement; for if this man had really seen the manner of the
death of Yelverton by any unknown means, why should he think it
necessary to bind him, Harcourt, the culprit, by a promise never to
mention his knowledge?
“We may, or may not, ever meet again. In the meantime, I rely
on your honor to keep your promise,” said Cutts.
“You may do so,” replied the young man, still dazed.
“Well, good-by.”
The gangplank was down, and the passengers were going off the
boat.
“Good-by,” returned Harcourt, and followed the stream to the
pier to begin his new life.
First he went to a barber’s shop and had his handsome dark
mustache shaved off, and his rather long, silken dark hair cut
short.
Then he went to a tailor’s and procured a rough suit of clothes,
which, after trying on, he kept on, and had his traveling suit put
up in a parcel, which he took under his arm.
New York shopkeepers are used to all sorts of queer customers,
but they certainly did look a little curiously after this strange
young man.
“An escaped lunatic, I shouldn’t at all wonder,” remarked the
proprietor.
Harcourt went in search of cheap lodgings in the lowest and
most crowded part of the city.
He saw many placards on the front of tall, dingy tenement
houses with rooms to let, furnished or unfurnished, with or
without board. But on inquiry he found they were rooms on
crowded floors, full of bad air, and he wanted an attic or a loft,
however poor and bare, that he might have the fresh air which was
so needful for the preservation of his health and ability to work.
At length, after some hours’ wanderings, he found what he
wanted on a street near the water. It was one of the oldest houses
of old New York, the basement and ground floors used for small
groceries and dry goods and the upper floors as tenements. The
attic, of two large rooms, each with two dormer windows, was
occupied only by a poor, solitary seamstress, who lived in the front
room. The back room was vacant, and bare of furniture, but, like
the attic rooms of many old houses, in city as well as country, it
had a small open fireplace, with cupboards on each side of the
chimney, and its two dormer windows gave a fine view of New
York Bay, with its picturesque headlands and islands.
Seven dollars a month, in advance, was the price of this attic
room.
Harcourt paid the money, and went out to buy the cheapest
furniture, in the smallest quantity that he could get on with, but
not from second-hand dealers; his inherited fastidiousness shrank
from the close contact of discarded household goods of whose
antecedents he knew nothing.
He bought a narrow cot, a straw mattress and pillow, two sets of
bed linen, two pairs of blankets and a woolen spread, a pine table,
a cane chair, a tea kettle, a coffee pot, a gridiron, and some little
crockery and cutlery. All his furniture, new though it was, did not
cost him more than twelve dollars.
He had this all arranged in his room before night.
Lastly, he went down to the baggage room of the steamer,
claimed his trunk, and had it brought up to his attic.
When he had paid the truckman, and shut the door upon him,
he knelt down beside his trunk, and with a little chisel began to
pry out the small brass-headed tacks that formed the initials of his
name—W. E. H.
To the agent of whom he rented the room he had given the
name of William Williams, persuading himself that the doubling
of his first name and the suppression of the other could scarcely be
called giving a false name.
He did not wish to take into his new life the old name. His
reluctance did not come from any remnant of false pride. All that
was gone now, and William Harcourt knew that labor with the
pick or shovel, the hod or trowel, honestly performed, was just as
honorable as labor with the pen, the pencil or the voice.
But he wished to guard against the chances of his mother’s
discovery of his hard life, which would certainly give her great
pain and distress, and lead to questionings that could not be
answered.
For the present he hoped and believed that she was enjoying a
rare season of comfort and happiness in the society of Ruth Elde,
at Goblin Hall, and with the prospect of several weeks of
uninterrupted peace.
He did not dare to write to her just yet; nor did he think she
would be uneasy at not hearing from him. She would just think
that he was so much absorbed in his happiness that, knowing she
was well cared for at Goblin Hall, he had delayed writing. She was
not jealous or exacting, this noble Dorothy Harcourt.
Later she must know the truth—that Roma Fronde had married
William Hanson and not William Harcourt; but, oh! let it be as
much later as possible. How should he tell her? How should he
explain his own part in that wrong? He could not think, and he
told himself it was not necessary to think just now.
He had borne as much of the burden of heavy thought as he
could bear without going mad.
When he had finished picking the tacks out of his trunk, and
shoved it across the bare floor into a corner, he began to feel faint
from fatigue and fasting. He was also very cold, for there was no
fire in the room.
He went out again, and bought a bucket of coal, a parcel of
kindling wood, a box of matches, a loaf of bread, a mutton chop
and a little coffee, sugar, pepper and salt.
Then he returned to his attic, kindled a fire in his rusty little
grate, filled his kettle from the water spigot at the end of the hall,
and cooked his frugal supper.
He had been accustomed, in his struggling college days, to wait
upon himself, as we have seen, and that had in some measure
prepared him for his present life. He was habitually neat, and
when he had finished his meal he washed up all utensils, set his
room in order, and then went to sit at one of the dormer windows
to look out upon the night. A starlit sky hung over the bay, with its
islands and headlands and its groves of shipping.
The hum of the city was far below him, and at this hour it was
much lessened. The house was also very still. No sound was to be
heard but the monotonous motion of the sewing machine worked
by the seamstress in the next room. In this silence and solitude,
thought overwhelmed him. Imagination conjured up the picture of
Roma in her island prison, in the power of William Hanson. He
could not bear this. He started up with a suppressed cry, and ran
downstairs and into the crowded streets. He pushed through the
crowd to get at freer space and fresher air, and went on toward the
piers.
He walked rapidly up and down one of the most deserted-
looking, to fatigue himself into the need of rest and the possibility
of sleep. He walked for hours, until he began to feel weary; then he
slackened his pace, but still walked and walked, being resolved to
so exhaust his physical powers that his mental faculties might find
rest in unconsciousness. He walked up and down until from very
prostration he had to stop and sit down on a pile of planks left
lying there.
He had been sitting there some time, felt somewhat rested, and
able to return to his lodgings, and was about to rise and retrace his
steps, when his attention was attracted by the figure of a man
coming toward him. The man was of low stature, slight and slim,
and would have looked like a boy but for his stooping shoulders
and long beard. He came on, tottering like an inebriate.
Something in his form and manner compelled Harcourt to look
at him. He came on, tottering from right to left, passed Harcourt
without seeing him, and went on toward the end of the pier.
Harcourt, moved by some inspiration he could not understand,
arose and followed him silently, closely.
When the stranger reached the end of the pier, where the water
was deep, he paused, looked down profoundly, much as Harcourt
himself had looked into the depth of Chesapeake Bay two nights
before.
“There is peace there,” the stranger murmured, using the very
words that Harcourt had used under a recent similar temptation.
And then he threw up his arms for the fatal leap.
But Harcourt’s swift arms were cast around him and held him
back.
The would-be suicide struggled hard to release himself, but he
was weak, very weak, and Harcourt, inspired by the sudden joy of
saving him, held him fast.
“Let me go! Who are you that would save a tortured and
maddened wretch from rest and peace?” demanded the stranger,
still struggling, though now very feebly, for his poor strength was
failing, and he seemed more like fainting than resisting. “Who are
you? Who are you, I say?”
“Another tortured and maddened wretch, who, two nights ago,
if conscience had not restrained him, would have sought rest and
peace as you wish to seek them now, but would not have found
them, as you would not have found them if you had taken that
fatal plunge. What is your trouble, man? Tell me. Possibly,
possibly, possibly, I may be able to help you bear it. God grant that
I may! Come, what is your trouble?” demanded Harcourt, setting
the stranger down upon a large box, placing himself at his side,
and passing his arm around the man’s waist, the better to protect
him from himself.
“Trouble!” cried the other. “Trouble enough! Illness all autumn.
No work. Wife and children freezing, starving, in a cellar. No food
for two days. Everything pawned but just enough clothes to cover
our nakedness. Trouble, indeed!”
“Good Heaven! good Heaven! It is incredible! ‘In a whole city
full!’” exclaimed Harcourt, quoting Hood. “Come with me. The
stores are not all closed yet. We will get coal and wood, and have a
fire and a supper. Come!”
“I—I——What do you mean?” demanded the dazed little man.
“‘All men are brethren.’ I cannot see my brother hunger or
freeze while I have the means of getting him food and a fire. Come
with me.”
And Harcourt arose and took the man by the arm and raised
him up.
The two walked from the pier.
There was a restaurant near at hand, Harcourt first took his
protégé in there, ordered beefsteak and coffee, and made him eat.
“How far is your home from this place?” inquired Harcourt.
“About half a block.”
“All right,” said the young man. “We will have something cooked
just here and take it with us as soon as it is ready.”
And he ordered half a gallon of stewed oysters, a quart of strong
coffee, and bread and butter for six, to be put in a hamper to be
taken away.
“I don’t know how many you have at home,” he said, “but the
order for six I judged a safe guess.”
“There are three at home—my wife, son and daughter, the two
last quite small children, the boy seven, the girl five,” said the
stranger.
“All right. You feel better now?” inquired the young man.
“Yes, much better, thanks to you; but how or when can I ever
repay you?”
“You are repaying me now. I was feeling as unhappy as you
yourself were when I was so blessed as to save you from suicide. I,
too, feel better, much better now. I am fully repaid.”
“It is good of you to look at it in that light. But have you had
trouble, too?” inquired the stranger with much feeling.
“Yes, but we will not talk of trouble now. We both feel better.
Here comes the waiter with the wife’s and children’s supper in the
hamper; let us go to them—that is, if you have finished.”
“Oh, I have finished,” said the stranger, pointing to the empty
platters, which he had cleaned.
Harcourt paid the bill for the stranger’s supper and for the
contents of the hamper.
Then both arose and left the restaurant, followed by the waiter,
with the hamper, who went with them to bring back the
crockeryware.
The stranger led the way to a dingy tenement house with an
open cellar door. The stranger dived down into this cellar,
followed by his two companions.
They found themselves in a deep, murky room, with a damp
flagstone floor, damp brick walls, a musty atmosphere, without
furniture, without fire, and without light, except from the street
gas lamp that stood directly in front of the house, and shone down
into the cellar.
By its light they saw three miserable human beings—a young
woman, a little boy, and a baby girl—huddled together on the
damp floor, as if trying to keep each other warm.
“Come, wife, cheer up! Help has come! Here is supper for you
and the children!” said the husband, taking the hamper from the
waiter, who was staring in astonishment at the party he had been
called upon to serve.
“You can go back now. It is but a step to your place, and come
later for the dishes—or I can send them around,” said Harcourt,
slipping a quarter into the waiter’s hand.
“All right, sir,” said the latter, now quite understanding, despite
Harcourt’s rough suit, that “a gentleman” had chosen to relieve a
starving family.
The husband and father had hastily arranged the food on the
cellar floor, and the famished wife and children had gathered
around. He had put a cup of coffee in the hands of his wife, and
was now giving hot milk to the two children.
It was a Rembrandt picture, seen in the glare of the street gas
lamp.
“Have you no light?” inquired Harcourt.
“Light! Should we have light when we have not fire, and hadn’t
food until you brought it?” exclaimed the man.
“Then I will hurry out and try to get some candles and some coal
before the stores are closed,” said Harcourt. And away he went.
He succeeded in buying a bucket of coal, a bundle of kindlings, a
box of matches, a pound of candles, and a pair of tin candlesticks.
With these he returned to his new friends, kindled a fire in the
stove, lighted two candles, and placed them in the candlesticks, on
the floor, and then looked around.
There was no furniture of any description in the cellar, unless a
pile of ragged bedclothes, in the dryest corner, next the chimney,
could be called such.
“I see what you are looking for, sir! But they are all at the
pawnbroker’s, every stick! And the rags would have been along
with the rest if any broker would have advanced ten cents on
them, to buy the children bread to-day.”
“It is dreadful, my friend, dreadful! I wish I could do more for
you now, but the stores are all closed. Make yourself as
comfortable as you can, under the circumstances, to-night, and to-
morrow I will see you again. What is your name, by the way?”
“Adler, sir; Abel Adler.”
“Mine is Williams. Good-night. You will see the hamper of
dishes returned?”
“Oh, yes, sir! Thank you more than words can say,” responded
Adler.
“More than words can say,” repeated his wife.
“Good-night! good-night!” said Harcourt hastily, and he hurried
out from the cellar.
It had cost him almost as much to relieve the pressing
necessities of this poor family as it had to furnish his own bare
attic room, and both outlays had nearly exhausted the remains of
the funds from the payment of that “old debt” which the “pious
fraud” of Ruth Elde, assisted by her Joe, had invented.
Poor Harcourt did not grudge the money, but he felt that he
must find work at once, or have nothing to send to his mother,
when, in the course of weeks, he should write to her.
He went up to his attic, but as soon as he found himself alone
there his temporary feelings of relief left him. While with Adler
and his family he had really felt better, as he had said; but it was
the surrounding and reflection of their happier feelings.
Now, in the solitude of his attic, remorse and despair seized him
again, much on account of his share in that tragedy at the Isle of
Storms, but more, far more, for that which had come of it—his
black, black treachery to Roma Fronde. The first might be
expiated when he should give himself up to justice to suffer the
penalty of his offense; but the last—the last! How should he ever
atone for the irreparable wrong done to Roma?
In the soul’s utter extremity to whom can it go but to its Father
in heaven?
Harcourt cast himself down prone upon the floor, and called
upon the name of the Lord, not for pardon—he dared not—but for
some means, through however much of suffering for himself, to
atone for his sin to Roma.
“I can do nothing! nothing!” he cried. “I have fallen hopelessly
into the pit! But with Thee ‘all things are possible.’ Thou holdest in
Thine almighty hands the springs of all life and all activity. Oh,
make it so that I may be sacrificed, humiliated, destroyed, for her
sake, so that she may be happy!”
In his deep despair time passed unheeded. He lay face
downward on the floor of his attic, sometimes giving vent to the
anguish of his soul in deep groans, sometimes rolling over, but
always falling into the same position, face to the floor.
So the wretched night passed, and the morning dawned and
found him there.
In the midst of his misery he became conscious that some one
was knocking at his door, and had been knocking for some few
seconds.
“Who is there?” he called at length, as he slowly rose from the
floor.
“It is I, your next neighbor. Are you ill? Can I do anything for
you?” inquired a sweet voice from without.
Will Harcourt instantly opened the door, and saw in the
uncertain light of the dawn a woman standing there. But whether
she was young or old, pretty or plain, he could not tell.
“Oh! you are all in the dark,” she said. “Let me go and bring my
candle.”
And she was off like a shot, before Harcourt could speak to
prevent her.
But he went to his cupboard and lighted his own candle, so that
when she came back with hers the darkness had fled.
By this light he saw that she was a middle-aged woman; but as
middle age is a sort of “movable feast,” anywhere between thirty
and sixty, let us be a little more definite, and say that she was
about forty, and not at all of the pale, thin, starved needlewoman
and tenement-house type whom to see or hear of is so
heartrending. She was plump, fair, rosy, blue-eyed and light-
haired, with a cheerful and kindly expression, and she was neatly
dressed in a gown of some cheap blue woolen material and a white
bib apron.
“You have been ill all night, I fear, and I am very sorry for it,”
she said as she set her candlestick down on the table and looked at
him. “I heard you groaning just as soon as I stopped my sewing
machine and could hear anything, but you ceased soon, and I
didn’t think much of it, but went to bed and to sleep. I always
sleep like a top; but this morning, as soon as I woke up, I heard
you groaning worse than ever, and I blamed myself for not
attending to you last night. Now what is the matter? Tell me. I am
a right good nurse and doctress, but not professional, so I don’t
cost my patients anything.”
“You are very kind, and I truly thank you, but I am not ill in the
body,” replied Harcourt, with a feeble smile.
“Not in body! Then in mind. But you have not slept all night, I
know, and so you are not well in body, any more than in mind. Lie
down there on your bed, and I will go and make you a cup of
coffee. No denial, and no thanks, please! I won’t have the first, and
I don’t want the last,” said the neighbor; and leaving her candle
with the other, to make the room more cheerful, she went back to
her own apartment.
Will Harcourt certainly felt soothed and comforted by the
homely kindliness of his neighbor, and even supported by the
motherly authority she assumed over him. He went and lay down
as she had bid him do.
Soon he heard her stirring about around her stove in the next
room, humming in a low tone a popular school song:
“Sing at your work, ’twill lighten
The labors of the day;
Sing at your work, ’twill brighten
The darkness of the way;
Sing at your work, though sorrow
Its lengthened shadow cast;
Joy cometh with the morrow,
And soon the night is past.”