2. (a) Compute the opportunity cost in forgone tanks for each additional truck produced:
Truck output 0 1 2 3 4 5
Tank output 5 4.5 3.8 3.0 2.0 0
Opportunity cost __ __ __ 0.8 __ __
Answer:
Opportunity cost __ __ __ 0.8 __ __
Show Working Here (if necessary):
(b) As truck output increases, are opportunity costs (A) increasing, (B)
decreasing, or remaining constant?
Answer (Choose One):
(A) increasing
(B) decreasing
(C) remaining constant
7. According to Figure 1.4 (you will need to look in your textbook for this figure),
(a) At which point(s) is this society producing some of each type of output but still producing inefficiently?
(b) At which point(s) is this society producing the most output possible with the available resources and technology?
(c) At which point(s) is the output combination currently unattainable with current available resources and technology?
(d) Show the change that would occur if the population of this society increased dramatically. Label this curve PPC2 (You can create your curve using Excel and pasting it as an image in Word. Instructions on how to graph using Excel can be found in your Course Materials for Module 1).
(e) Show the change that would occur with a huge natural disaster that destroyed vast amounts of infrastructure. Label this curve PPC3.
8. Suppose either computers or televisions can be assembled with the following labor inputs:
Units produced 1 2 3 4 5 6 7 8 9 10
Total labor used 3 7 12 18 25 33 42 54 70 90
(a) Draw the production possibilities curve for an economy with 54 units of labor. Label it P54 (You can create your curve using Excel and pasting it as an image in Word. Instructions on how to graph using Excel can be found in your Course Materials for Module 1).
(b) What is the opportunity cost of the eighth computer?
(c) Suppose immigration brings in 36 more workers. Redraw the production possibilities curve to reflect this added labor. Label the new curve P90(You can create your curve using Excel and pasting it as an image in Word. Instructions on how to graph using Excel can be found in your Course Materials for Module 1).
(d) Suppose advancing technology (e.g., the miniaturization of electronic circuits) increases the productivity of the 90-laborer workforce by 20 percent. Draw a third production possibilities curve (PT) to illustrate this change (You can create your curve using Excel and pasting it as an image in Word. Instructions on how to graph using Excel can be found in your Course Materials for Module 1).
11. Suppose there's a relationship of the following sort between study time and grades:
(a) (b) (c) (d) (e)
____________________________________________________________________
Study time (hours per week) 0 2 6 12 20
Grade point average 0 1.0 2.0 3.0 4.0
If you have only 20 hours per week to use for either study time or fun time:
(a) Draw the (linear) production possibilities curve on the graph below that represents the alternative uses of your time.
(b) Indicate on the graph the point C that would get you a 2.0 grade average.
Include Answer Here:
Fun Time = ________ Hours
Study Time = _______ Hours
(c) What is the cost, in lost fun time, of raising your grade point average from 2.0 to 3.0? Illustrate this effort on the graph (point C to point D).
Include Answer Here:
Fun Time = ________ Hours
(d) What is the opportunity cost of increasing your grade point average from 3.0 to 4.0? Illustrate as point D to E.
Include Answer Here:
Fun Time = ________ Hours