Micro_HW_1_-_Spring_2008

Micro_HW_1_-_Spring_2008 - producing cars by growing wheat....

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Homework Assignment 1 Penn State ECON 002 Clair Smith Chad Eckard LAST 4 DIGITS OF PSU ID: 9719 Section: 007 1. Identify whether each of the following is a normative or positive statement: a. Lower interest rates lead to more borrowing. Normative b. Interest rates are too high. Positive 2. When comparing two producers of a certain good, the one that can produce more of the good from a given amount of resources is said to have what kind of an advantage in the production of the good? Absolute Advantage 3. The fact that as individuals we must make choices about how to spend our time and money is driven by what fundamental economic principle? Opportunity Cost 4. If the marginal benefit to the consumer of the last unit produced is just equal to the marginal cost to the producer of making that good, what kind of efficiency has been achieved? Allocative Efficiency 5. In “The Iowa Car Crop,” Landsburg describes a lesser known way of
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Unformatted text preview: producing cars by growing wheat. His point in this brief chapter is that international trade is just ___________ (complete this sentence below.) a form of technology 1 6-8. Draw a shopkeepers production possibilities frontier for pizza and stromboli. Suppose that production of these goods is subject to constant marginal opportunity costs in production, and be sure that your graph reflects this fact. Now suppose that the shopkeeper installs a newer, larger, more efficient oven. Show, on the same graph, how this change affects the ppf. 9-10. Draw and label a Supply and Demand graph for the market for pizza in State College. Now suppose that the price of mozzarella, sauce, and flour all increase. Show how this affects your original graph. Make sure it is clear which parts change and in what direction. 2...
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Micro_HW_1_-_Spring_2008 - producing cars by growing wheat....

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