problemSet01 - ECONOMICS 100 PROBLEM SET#1(Production...

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ECONOMICS 100 PROBLEM SET #1 (Production Possibilities; Supply and Demand) Problem Sets are taken up in tutorials – see the website for the times and locations. 1. Production Possibilities An economy produces only wheat and cloth. Land and labour are the only factors of production. Through the use of diagrams, show how the original production possibility curve would change (if at all), if each of the following independent events were to occur. Give a short explanation. a) Mandatory retirement is forbidden. b) An innovation (technological improvement) occurs in the cloth industry. c) A large number of workers in the cloth industry are laid off. d) An earthquake destroys some of the land suitable for wheat production. 2. Production Possibilities and Opportunity Cost The kingdoms of Upper and Lower have the straight line production possibility frontiers shown below. The initial production level in Upper is shown as U; and Lower as L. 2.1
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This note was uploaded on 08/24/2010 for the course ECO 100 taught by Professor Indart during the Fall '08 term at University of Toronto.

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problemSet01 - ECONOMICS 100 PROBLEM SET#1(Production...

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