problemset1 - Economics 103 Professor Friedman Fall 2011...

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Economics 103 Your Name:__________________________________________ Professor Friedman Your TA:____________________________________________ Fall 2011 Your Section Time and Day:_____________________________ Problem Set 1 1. Production Possibility Frontiers. a) Between sugar and marijuana, there is a tradeoff. The two crops are mutually exclusive – the Jamaican farmer can either grow more sugar or more marijuana. Because the farm is only ten acres, there is limited land in which sugar and marijuana are grown. These crops are substitutes. The Jamaican farmer can choose to grow either more marijuana or more sugar. Figure 1 – Production Possibility Frontiers - Marijuana vs. Sugar In Figure 1 , the tradeoff as shown as a declining slope because these goods are substitutes for one another. b) If irrigation is provided for the farm, the slope of the production possibilities frontier will slant further along the x-axis, as shown in Figure 2. Figure 2 – Production Possibility Frontiers – Marijuana vs. Sugar with Effect of Irrigation
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production possibilities frontier will be steeper, as shown in Figure 3. Figure 3 – Production Possibility Frontiers – Marijuana vs. Sugar with Effect of Pests c) The herbicide will cause an increase in marijuana productivity. See Figure 4. Figure 4 – Production Possibility Frontiers – Marijuana vs. Sugar with Effect of Herbicide If farmers discover they can raise the output of both marijuana and sugar if they integrate the crops, then the productivity will increase. However, marijuana and sugar are still not complements. See Figure 5. Figure 5 – Production Possibility Frontiers – Marijuana vs. Sugar with Effect of Integration
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This note was uploaded on 04/04/2012 for the course ECON 103 taught by Professor Voorheis during the Fall '08 term at UMass (Amherst).

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problemset1 - Economics 103 Professor Friedman Fall 2011...

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