Economics 1 - Fall 1996 - Olney - Midterm 1

Economics 1 - Fall 1996 - Olney - Midterm 1 - ECON 1 F96...

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ECON 1 F96 Prof. M. Olney First Midterm 1. Consider a small country in Africa in which two goods are produced: food and agricultural implements. Almost everyone in the country is engaged in production of food. This country has extremely low output per person; thousands of people die every year from starvation or malnourishment. Peace Corps volunteers from the United States go to the country and teach the residents new ways to fertilize and irrigate their lands, increasing the land's productivity. What effect will the Peace Corps program have? Explain. Illustrate your answer with a production possibilities frontier. 2. Assume that the more years of schooling a worker has, the greater is their marginal product. Congress passed a bill to deny public schooling to the children of illegal immigrants. Suppose these children therefore do not go to school but also do not leave the U.S. What effect will this bill have on the wages of the children of illegal immigrants when they become 16 years old and begin working? Explain.
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