Homework Assignment #1

# Homework Assignment #1 - MIME 2600 Engineering Economics...

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MIME 2600 – Engineering Economics Homework Assignment #1 Due on Friday, 1/25/08 Problem #1 – Given the following production possibilities schedule: Aircraft Carriers Scooters A 10 0 B 9 500 C 8 950 D 7 1300 E 6 1650 F 5 1950 G 4 2200 H 3 2400 I 2 2600 J 1 2750 K 0 2900 (a) Draw the production possibilities curve. (b) Determine the opportunity cost of producing 1 aircraft carrier. (c) Determine the opportunity cost of producing 1300 scooters. (d) Add point X for 5 aircraft carriers and 1000 scooters to your plot. Determine the opportunity cost of shifting from point X to point F. (e) Indicate what would happen to the production possibility curve if suddenly the supply of steel used in both products was reduced due to a large fire at the local steel mill. Problem #2 – Given the following economic data for 2 countries: GDP Real GDP Population Country A – 2000 \$10,000,000 \$10,000,000 2000 Country B – 2000 \$200,000,000 \$200,000,000 10000 Country A – 2005 \$12,000,000 \$10,500,000 2500 Country B – 2005 \$240,000,000 \$193,000,000 10500 (a) Determine which country had a better year in 2005 compared to 2000 in terms of physical output. Justify your answer.

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