micro economics
original_work_seeker
econ.zip1900862923.pdf
Review for Quiz 1
1. Write 2 sentences - one that is clearly a positive economic statement, and one that is clearly a normative economic statement. For each sentence indicate whether it is a positive statement or normative statement and explain why.
2. A farmer can produce 10,000 pears on her one acre farmland. When she uses the same land for apple cultivation, a total of 5,000 apples can be produced. She realizes that with the introduction of a new fertilizer, she can increase the maximum production of apples to 7,000. The maximum production of pears, however, remains unchanged. Given that her production possibility frontier (PPF) is linear and apples are graphed on the Y-axis and pears on the X-axis, calculate the slope of her original PPF and her new PPF.
3. Draw the two PPF curves for the farmer in question 4. What type of economic growth occurs with the introduction of the new fertilizer?
4. What is the opportunity cost of going to college? What is the opportunity cost of attending class? Be very clear and remember to consider explicit and implicit costs.
5. Suppose the inverse demand function for a certain model of a pair of running shoes is given by: p = D(q) = 210 - 15q, where p is the price (in $) and q is the quantity demanded (in hundreds). Be careful of the units when you give your answer.
a. 5 points: Express the demand curve as an equation.
b. 10 points: Find the price at each level of demand: q=400, q=1000
c. 10 points: Find the quantity demanded at each price: p=45, p=75
Also look at the HW assignments, and in class exercises!
1120258237.pdf
You won a free ticket to see a Beyoncé concert (which has no resale value). Madonna is performing on the same night and is your next-best alternative activity. Tickets to see Madonna cost $140. On any given day, you would be willing to pay up to $150 to see Madonna. Assume there are no other costs of seeing either performer. Based on this information, what is the opportunity cost of seeing Beyoncé?
A. $0 B. $10 C. $140 D. $150 E. Other amount?
1714624924.pdf
Class 2 - in class problem
Jasmina and Fang can produce candy and/or chop wood using their own labor. However, they differ as to how much of each good they can produce in a day.
a) Jasmina can produce either 3 candy bars or 6 cords of wood in a day. By splitting her time between the 2 activities, she can produce various combinations of the 2 goods. If T is the fraction of the day she spends making candy and (1-T) is the fraction of the day she spends cutting wood, she produces 3T candy bars and 6(1-T) cords of wood. Draw Jasmina’s PPF. What is her MRT?
note: put cords of wood on vertical axis and candy bars on the horizontal axis.
b) Fang can produce either 3 cords of wood or 6 candy bars in a day. By splitting her time between the 2 activities, she can produce various combinations of the 2 goods. Draw Fang’s PPF. What is her MRT?
c) Combine Jasmina’s and Fang’s PPF into one joint PPF and graph it. note: put cords of wood on vertical axis and candy bars on the horizontal axis. What is the MRT?
d) Do either have a comparative advantage in the production of wood? what about in production of candy?
e) If Jasmina and Fang like to consume wood and candy bars in equal proportions. How much will each produce on their own?
f) If Jasmina and Fang can trade products with each other, how much of each good will they each produce? Will they trade? and if so, on what terms?
g) How does the joint PPF in part c) change if Jasmina and Fang can also trade with Harvey, who can produce 5 cords of wood or 5 candy bars (or any linear combination) in a day?s
Class 2 - in class problem
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