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Homework#1_Fall2011 - points 3 Sketch a production...

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195.603 Applied Microeconomics Professor: Carey Borkoski, Ph.D. Homework #1 – due August 31rst. Answer the following questions on your own paper. First, provide the intuition or conceptual answer. If applicable, illustrate with a graph or calculations. (30 points) 1. Find an article in a recent newspaper, magazine or blog related to one of the first twelve principles (You do not need to hand in a copy of the article, just include a citation). (5 points) a. Identify which principle is illustrated. b. Does the article support the principle? Why or why not? c. What economic questions are raised by the article? 2. Describe some of the trade-offs faced by each of the following: a. A family deciding whether to buy a hybrid car (5 points) b. Debt-ceiling negotiations that include cuts to Social Security and Medicare (5
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Unformatted text preview: points) 3. Sketch a production possibilities curve and include: (a)two feasible and efficient points, (b)an unattainable point. Explain what it means when a PPC is bowed outward. (5 points) 4. Suppose a worker in Australia can produce 20 units of food or 5 units of electronics per month while a worker in Korea can produce 8 units of food or 4 units of electronics per month. Assume each country has only one worker. (10 points) a. What is the opportunity cost of a unit of food in Australia? What is the opportunity cost of a unit of electronics in Australia? b. What is the opportunity cost of a unit of food in Korea? What is the opportunity cost of a unit of electronics in Korea? c. Should the countries specialize in production or be independent? Explain your answer....
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