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11quiz1Bagi - (Bagi Elements of Microeconomics Quiz#1 Name...

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(Bagi) Elements of Microeconomics Quiz #1 Name: ________________________________ Section: _____ 1. Suppose a factory has 3 workers, worker A, B and C. They can produce chairs and tables. The following chart gives the maximum numbers of chairs and tables they can produce. Worker Chairs Tables A 10 2 B 5 2 C 8 1 a) Draw the factory’s production possibility frontier (PPF), clearly labeling the graph and slopes. b) What property should the PPF in your answer a) satisfy? Explain. c) If the price of a chair is \$15 and the price of a table is \$60, how many chairs and tables will the factory produce? Show your answer graphically or mathematically. d) Given the price of chair is \$15, sketch and explain the supply curve for tables.

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Unformatted text preview: e) Why is the supply curve you found in d) upward sloping? Explain. 2. Andy has income of \$10 he spends it on beef and apple. A pound of beef costs \$5 and a pound of apples costs \$2. a) Draw his budget constraint, clearly labeling intercepts and slope. b) Depict reasonable indifference curves for Andy. List two properties that these curves should satisfy, and explain them. c) Using your answers in a) and b), find his optimal consumption plan. Show your answer graphically. d) Get two points on Andy’s demand curve for apple. Explain how you found them. e) Suppose Andy became a vegetarian. Depict his new indifference curves and find his new optimal consumption plan....
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