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ECO101_PS1 - ECO 101 Spring 2014 PROBLEM SET 1 Q.1 Graph...

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ECO 101 Spring 2014 PROBLEM SET 1 Q.1 Graph the functions (1) y = 8 + 3 x (2) y = 8 – 3 x a) Find the slopes and intercepts of the functions above. b) Explain the relationship between the dependent and the independent variables x and y for each equation. Q.2 y 80 b 60 a 40 c 20 Z Z 0 20 40 60 80 100 x a) What is the slope of the curve ZZ at point a ? b) What is the slope of the curve ZZ at point b ? c) What is the slope of the curve ZZ at point c ? Q.3 Explain positive and normative economics briefly. Q.4 Which of the following statements are examples of positive economic analysis? Which are examples of normative analysis? a-) The inheritance tax should be repealed because it is unfair. b-) Allowing Chile to join NAFTA would cause wine prices in United States to drop. c-) The first priorities of the new regime in the Democratic Republic of Congo should be to rebuild schools and highways and to provide basic health care. Q.5 Explain how a production possibilities frontier exhibits the concept of scarcity. Q.6 How does a production possibilities frontier exhibit opportunity cost? 1
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Q.7 Fill in the blanks according to the figure. i. The figure indicates that if this economy uses all the resources in an efficient way, it is capable to produce ______.
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