Homework 1 - Economics 304L: Principles of Macroeconomics...

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Economics 304L: Principles of Macroeconomics Fall 2009 Sadler Homework 1 1. Mankiw text, Chapter 2 Problems and Applications (pp. 38 – 39), No. 2. 2. Chapter 2 Problems and Applications, No. 4. 3. Consider the following production possibilities frontier (PPF) showing efficient combinations of guns and butter production for the economy of Mackbrownistan. a. Assume that this economy begins at point A and desires to change the mix of products that it produces to point B. What is the marginal rate of transformation that corresponds to this change? Provide an interpretation of the number you calculated in terms of opportunity cost. b. Now assume that the economy begins at point C and desires to change the mix of products that it produces to point D. What is the marginal rate of transformation that corresponds to this change? Again provide an interpretation of your answer in terms of opportunity cost. c.
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Homework 1 - Economics 304L: Principles of Macroeconomics...

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