econ101_ps2 - METU Department of Economics Econ 101...

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METU Department of Economics Econ 101: Introduction to Economics I Sections 01-02-03 Fall 2010 PROBLEM SET 2 PART A: PROBLEMS 1. Draw the production possibility frontier and fill in the blanks according to the table. (Put the amount of meat on the x-axis and the amount of fish on the y-axis) Combination A B C D E F G H K L Fish 0 13 23 32 40 47 52 56 59 60 Meat 108 102 95 87 78 67 53 36 19 0 a) The production possibilities frontier for this isle will be shaped _______. b) The slope (in absolute value) along this production possibilities frontier ____________ as more meats (placed on the X-axis) are produced. c) The slope of this production possibilities frontier ___________. d) When the economy moves from point C to F, the opportunity cost of an additional fish, in terms of meat, is ____ meat(s). e) The opportunity cost of each additional fish in terms of meat ________. i) falls as more fish are produced ii) increases as more fish are produced iii) remains constant iv) is meaningless because the cost of fish cannot be expressed in terms of meat(s). f) The opportunity cost of each additional meat in terms of fish ________. i) is meaningless because the cost of fish cannot be expressed in terms of meat(s) ii) remains constant iii) falls as more fish are produced iv) increases as more meats are produced
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g) When the economy moves from point K to D, the opportunity cost of an additional meat, in terms of fish, is ___ fish. 2. Fill in the blanks according to the figure. a) The production possibilities frontier illustrates the notion of _____.
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