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Hints for Economics 452 Problem Set One

Hints for Economics 452 Problem Set One - Hints for...

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Hints for Economics 452 Problem Set One Do a rough draft first, then copy more neatly to version you turn in. Work on each question as we complete that portion of chapter 3 so you do not put it all off until just before due. Questions 3 and 4 build on questions 1 and 2. Write your solutions on printout of the questions and staple pages together before turning in your problem set. 1&2. Since says to put bananas on the vertical axis, bananas takes the place of wine and apples is like cheese. For 1a and 2a when writing the equations for the Home and Foreign PPFs, make sure to write the labor constraint form with general notation first, then plug the numbers in, then rearrange to be in slope intercept form (with quantity of bananas on the left-hand side). For Home and Foreign’s maximum production of apples and bananas, use the Q bar notation. See Example 3.1 Home PPF (slides 14-17) and Example 3.2 Foreign PPF (slides 24-27). When drawing the PPFs, wait until you have determined Foreign’s maximum production of bananas. Make the horizontal scale go
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