Eco 1 HW 1 ,Jan 29-1 - 29 Jan 2010 Homework I for ECO1 This...

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29 Jan 2010 Homework I for ECO1 This homework is due no later than 6:00pm on Wednesday, Feb 3rd. You should submit your homework in the box under your TA’s mailbox in Room 211 in the Rauch Business Center. This homework will not be graded on accuracy! If you make an effort to answer each question and yet get every answer wrong then you will receive full credit. 1. Explain the law of increasing marginal opportunity cost. What is the implication of the idea for the shape of the production possibilities frontier? 2. You win free tickets to a movie and a free dinner. Would there be a cost to you to attend this movie? Explain. 3. We divide all the goods into 2 types: consumption goods and capital goods (e.g. machinery, computers, and goods used to produce other goods.) A. Use the production possibilities frontier graph to illustrate the trade-off to an economy between producing consumption goods and capital goods. Is it a straight line or bowed out?
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