ECON 1000 D - Assignment 1

ECON 1000 D - Assignment 1 - Assignment #1 ECON 1000 D,...

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1 Assignment #1 ECON 1000 D, Professor Vivek Dehejia DUE DATE: In tutorial , October 7 th , 2010 Answer ALL questions. Students who submit an assignment to more than one tutorial section will receive a ZERO. You may work with classmates, but submitted work should be completed independently. Question 1 (10 points): Suppose there are 10 million workers in Canada, and that each of these workers can produce either 2 cars or 30 tonnes of wheat in a year. (a) What is the opportunity cost of producing a car in Canada? What is the opportunity cost of producing a tonne of wheat in Canada? Explain the relationship between the opportunity costs of the two goods. (3 points) (b) Draw Canada’s production possibilities frontier. If Canada chooses to consume 10 million cars, how much wheat can it consume without trade? Label this point on the production possibilities frontier. (3 points) (c) Now suppose that the United States offers to buy 10 million cars from Canada in exchange for 20 tonnes of wheat per car. If Canada continues to consume 10 million cars, how much wheat does this deal allow
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ECON 1000 D - Assignment 1 - Assignment #1 ECON 1000 D,...

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