Problem Set 1

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Problem Set 1

Question

Problem Set 1

 

1.

The table below list the different combinations of surfboards and tables that can be produced with a fixed quantity of resources

  1. Production Possibilities Frontier
      Surfboards Tables
    A 0 140
    B 50 120
    C 90 90
    D 120 50
    E 140 0
      1. Plot the production possibilities frontier
      2. Show a point X that is both feasible and efficient
      3. What is the opportunity cost of moving production from A to B?
      4. What is the opportunity cost of moving production from E to C?
      5. Does this PPF display the Law of Diminishing Returns? Explain

 

  1. A drought destroys many coffee trees. Using a demand and supply diagram, illustrate and explain what happens to the market for coffee.

 

  1. The demand and supply schedule for beef is illustrated in the table below
Demand and Supply of Beef
Price per pound (in USD $)

Quantity Demanded

(in thousands of pounds)

Quantity Supplied

(in thousands of pounds)
$4.00 60 0
5.00 50 20
6.00 40 40
7.00 30 60
8.00 20 80
9.00 10 100
    1. Graph the demand and supply of beef. Label all parts of the graph.
    2. What is the equilibrium price and quantity?
    3. If the price of beef were $5.00 per pound, would we have a shortage or surplus? How much is the excess?
    4. If the price of beef were $7.00 per pound, would we have excess demand or excess supply? How much is the excess?
    5. The American Medical Association puts out a report that beef is unhealthy. Show graphically and explain how this may affect the market for beef.

 

  1. The demand and supply schedule for computer engineers is illustrated in the table below:
Demand and Supply of Computer Engineers

Wage (per hour in USD)

Quantity Demanded

(labor hours)

Quantity Supplied

(labor hours)
$40 200 60
50 150 80
60 100 100
70 50 120
80 0 140
    1. Graph the demand and supply for computer engineers. Label all parts of the graph
    2. What is the equilibrium wage and quantity?
    3. The US President passes legislation that restricts the entry of computer engineers from other countries. Show how this might affect the market for computer engineers.

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This question is taken from Econ 102 – Principles of Macroeconomics » Spring 2022 » Quizzes