Principles of Macroeconomics

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Review Questions for Midterm 1 Econ 101, Lecture 4, Spring 2007 Professor Korinna K. Hansen TAs: Jonathan Thornhill, Kyoung Jin Choi, Woo Jin Choi and Jim Lin Use the graph below to answer the following question. 1) In the above Figure, which of the following is true? a) Point A is the most efficient b)Point B is the most efficient. c) Point C is unattainable. d) b) and c) are true Use this graph for the next question.
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2) If an economy operates at point A on the production possibilities curve shown in Figure above. Haircuts T-shirts 3. The picture above gives you the production possibility frontier (PPF) for t-shirts and haircuts in an economy. What is the explanation for the over time shift in the PPF? Use the following information to answer the next two questions:
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A carpenter and an electrician live next door to each other. Each has a house that is in the same need of repairs. In each house some carpentry work needs to be done and some electrical work. The amount of repairs needed is identical. The carpenter can complete the carpentry work in either house in 1 day and the electrical work in 2 days. The electrician can complete the carpentry work in either house in 3 days and the electrical work in 4 days. (Hint: Note that in this example large numbers imply less productivity. That is the reverse of what we have seen in other similar problems and makes it a harder problem). 4) For the carpenter, the opportunity cost for carpentry is ____________ of electrical work and the opportunity cost for electrical work is ___________ of carpentry 5) For the electrician, the opportunity cost for carpentry is ____________ of electrical work and the opportunity cost for electrical work is ______________ of carpentry. a) 3/4; 4/3 b) 4/3; 3/4 c) 3/4; 3/4 d) 4/3; 4/3
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Use the following information to answer the next three questions: Wheat A C B E F D Rice
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