assignment1ch1-ch3 - Hsin-Yi Ma ID: 50063994 Ch1. Problems...

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Hsin-Yi Ma ID: 50063994 Ch1. Problems and applications: 2. If I decide to take a vacation, then the benefit I can get is the psychological satisfaction. And the opportunity cost is the cost of airfare and hotel, and my forgone wages. 5. Because I already spent $5 million in this new products and it still need to pay $1 million to finish it, but the expected sales are only $3 million now. So I should stop the existing development, and reform the development to compete with competing products. 8. a. In my point of view, it will make people harder to work. Because the welfare recipients are limited only have benefits of two year. b. This change represents the trade-off that the government wants to take care of people in need to help, but also can not reduce the incentive to the productivity. Ch2. Questions for review: 6. If the economy uses all its resources in milk, assume the production will be 400 tons of milk and no cookies; if the economy uses all its resources in cookies, and assume the production will be 300 tons of cookies and no milks. The reduction by half of the economy’s cows means the resources are reduced by half, so the maximum output of the two products also reduced by half, the PPF inward and the slope is still the same. Cookies Milk 0 100 100 200 400 300 200 300 150 1
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7. Assume the economy produces wheat and computers, A means the maximum production of wheat and no computers; E means the maximum production of computers. The PPF as below: Computers Wheat 0 A B C D E F G Points on the PPF (like A-E) efficient: all resources are fully utilized Points under the PPF (like F) not efficient: some resources underutilized Points above the PPF (like G)
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This note was uploaded on 09/20/2011 for the course ECO 501 taught by Professor Stanleyholmes during the Spring '11 term at Texas A&M University–Commerce.

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assignment1ch1-ch3 - Hsin-Yi Ma ID: 50063994 Ch1. Problems...

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