Part 1: Tyson And Ella Work At Ruby Red Movie Theater ✓ Solved

Part 1: Tyson and Ella work at Ruby Red Movie Theater. After

Part 1: Tyson and Ella work at Ruby Red Movie Theater. After work they watch a movie. After purchasing tickets, they buy popcorn, drinks, and candy. Use the circular flow diagram to describe the purchases they made and the goods and services provided to them. Your response must be at least 75 words.

Part 2: Tyson can produce 100 bags of popcorn or 50 hot dogs per hour. Ella can produce 100 bags of popcorn or 30 hot dogs per hour. Answer these questions with shown work: 2A. If Tyson and Ella attempted to produce both popcorn and hot dogs, how many bags of popcorn and hot dogs could each produce per hour? What would be the total per hour produced by both workers combined? 2B. Calculate the opportunity cost of producing popcorn for each worker: Tyson: 1 bag of popcorn costs how many hot dogs forgone; Ella: 1 bag of popcorn costs how many hot dogs forgone. Who has lower opportunity cost of producing popcorn? 2C. Calculate the opportunity cost of producing hot dogs for each worker. 2D. Determine how many bags of popcorn should be produced per hour by each worker. Who should specialize in producing popcorn? Who should specialize in producing hot dogs? Include a table showing specialization production of popcorn and hot dogs, total production with specialization, total without specialization, and the difference. 2E. What potential ethical issues could arise from the decision to have both employees specialize in producing popcorn or hot dogs? Name and explain at least two issues.

Paper For Above Instructions

Introduction and Part 1 Response

The scenario at Ruby Red Movie Theater offers a microeconomic lens on the circular flow of economic activity and basic market exchanges. Tyson and Ella, employees at the theater, are both workers who earn wages, while the theater purchases inputs and services (concession operations) from suppliers and sells a final service to consumers (movies and refreshments). In the circular flow model, households (Tyson and Ella) supply labor to firms (the theater) and receive wages in return, which they then spend on goods and services produced by firms (popcorn, drinks, candy, and movie screenings). The theater deposits revenue, pays wages, and buys inputs; households receive income and demand goods and services. Tyson and Ella’s purchases of popcorn, drinks, and candy are payments that circulate back to the theater and its suppliers, illustrating the mutual interdependence of households and businesses in a simple economy. This exercise reinforces how day-to-day consumer choices feed into larger economic flows and how worker production choices affect overall output (Mankiw, 2021; Krugman & Wells, 2018).

Part 2 Analysis: Production Possibilities, Opportunity Costs, and Specialization

Assumptions: Each worker can produce only two goods—popcorn and hot dogs. Tyson can produce 100 bags of popcorn or 50 hot dogs per hour; Ella can produce 100 bags of popcorn or 30 hot dogs per hour. The production possibilities for each worker are linear, reflecting opportunity costs along the frontiers P/100 + H/50 = 1 for Tyson and P/100 + H/30 = 1 for Ella, where P denotes bags of popcorn and H denotes hot dogs per hour. These relationships imply the maximums and the trade-offs between the two goods for each worker (Mankiw, 2021; Lipsey & Chrystal, 2019).

2A. Feasible per-hour production for both workers

For Tyson, feasible combinations satisfy P_T/100 + H_T/50 = 1, with intercepts (P_T, H_T) = (100,0) and (0,50). For Ella, feasible combinations satisfy P_E/100 + H_E/30 = 1, with intercepts (P_E, H_E) = (100,0) and (0,30). A concrete, feasible plan (showing both goods) is: Tyson produces 60 popcorn and 20 hot dogs; Ella produces 60 popcorn and 12 hot dogs. Verification: Tyson -> 60/100 + 20/50 = 0.6 + 0.4 = 1.0; Ella -> 60/100 + 12/30 = 0.6 + 0.4 = 1.0. Total per hour: 120 bags of popcorn and 32 hot dogs. This illustrates how a two-person workforce can split time between two goods while respecting their individual production frontiers (Mankiw, 2021; Parkin et al., 2019).

2B. Opportunity cost of producing popcorn

For Tyson, the frontier P_T + 2H_T = 100 implies that increasing popcorn by 1 bag reduces hot dog production by 0.5 hot dogs (the slope dH/dP = -0.5). Therefore, the opportunity cost of 1 bag of popcorn for Tyson is 0.5 hot dogs. For Ella, P_E + (10/3)H_E = 100 implies dH/dP = -0.3; thus the opportunity cost of 1 bag of popcorn for Ella is 0.3 hot dogs. Since Ella’s opportunity cost of producing popcorn is lower (0.3

2C. Opportunity cost of producing hot dogs

For Tyson, dP/dH = -2, so the opportunity cost of 1 hot dog is 2 bags of popcorn. For Ella, dP/dH = -10/3 ≈ -3.333, so the opportunity cost of 1 hot dog is about 3.333 bags of popcorn. Tyson has the lower opportunity cost of producing hot dogs (2 vs. 3.333), so Tyson has the comparative advantage in hot dogs (Mankiw, 2021; Lipsey & Chrystal, 2019).

2D. Optimal per-hour production and specialization

Based on comparative advantage, Ella should specialize in popcorn and Tyson should specialize in hot dogs. If Tyson devotes all hour to hot dogs and Ella devotes all hour to popcorn, total per hour is: Tyson = 50 hot dogs, Ella = 100 popcorn. Combined per hour: 100 popcorn and 50 hot dogs (P_total = 100, H_total = 50). Without specialization (both producing a mix along their frontiers), a feasible, non-specialized allocation could be Tyson: 50 popcorn and 25 hot dogs, Ella: 50 popcorn and 15 hot dogs (both on their frontiers approximated in practice). This yields P_total = 100 and H_total = 40. Thus, specialization yields 10 more total units of output per hour (50 hot dogs vs. 40 hot dogs) with the same overall time input, illustrating the gains from trade and specialization (Mankiw, 2021; Parkin et al., 2019).

2E. Potential ethical issues of specialization decisions

Two notable ethical concerns arise when assigning workers to specialized tasks. First, there is the risk of decreased job satisfaction and morale due to monotony and repetitive tasks, which can affect worker well-being and turnover. The Job Characteristics Model shows that task variety and autonomy influence motivation and satisfaction; forced specialization without rotational strategies may undermine intrinsic motivation (Hackman & Oldham, 1976; Colander, 2018). Second, fairness and equity considerations emerge when task allocations appear biased or unequal, potentially yielding perceptions of favoritism or unequal opportunity. In workplace settings, managers should balance efficiency with workers’ rights, safety, and development opportunities, and consider rotation or cross-training to mitigate monotony and allow broader skill development (Baumol & Blinder, 2016; Hubbard & O’Brien, 2016).

Conclusion

The exercise demonstrates core microeconomic concepts using a service-industry setting. The circular flow underlines how consumer purchases (concessions) flow to the firm and back as income, while production decisions (popcorn and hot dogs) reflect opportunity costs and comparative advantage. Specialization, driven by lower opportunity costs, enhances total output, but ethical considerations—such as job satisfaction, safety, and fairness—must be addressed through rotation, training, and transparent decision-making to preserve both efficiency and employee well-being. These ideas align with foundational economic texts and modern management theory (Mankiw, 2021; Krugman & Wells, 2018; Hackman & Oldham, 1976; Parkin et al., 2019).

References

• Mankiw, N. G. (2021). Principles of Economics (9th ed.). Cengage.
• Krugman, P., Wells, R., & Graddy, I. (2018). Economics (5th ed.). Worth Publishers.
• Parkin, M., Bade, R. & Powell, M. (2019). Economics (9th ed.). Pearson.
• Lipsey, R. G., & Chrystal, A. (2019). Economics (13th ed.). Oxford University Press.
• Samuelson, P. A., & Nordhaus, W. D. (2010). Economics (19th ed.). McGraw-Hill.
• Frank, R. H., & Bernanke, B. (2018). Principles of Economics (6th ed.). McGraw-Hill.
• Colander, D. (2018). Macroeconomics (9th ed.). McGraw-Hill.
• Hubbard, R. G., & O’Brien, A. (2016). Microeconomics (6th ed.). Pearson.
• Case, K., Fair, R., & Oster, R. (2020). Principles of Economics (11th ed.). Pearson.
• Baumol, W. J., & Blinder, A. S. (2016). Economics: Principles and Policy (12th ed.). Cengage.
• Hackman, J. R., & Oldham, G. R. (1976). Motivation through the design of work: Test of a theory. Organizational Behavior and Human Performance, 16(2), 250-279.