Homework I Name:
Econ 260.3
Spring 2016
Manjuri Talukdar
1. A country has the following production possibility schedule:
Tank Production Wheat Production
(Number per year) (Bushels per year)
0 1,000,000
1,000 950,000
2,000 850,000
3,000 700,000
4,000 400,000
5,000 0
a. Draw the country's production possibility frontier
b. What's happening to the opportunity cost of wheat as the country produces more and more wheat
c. What is the opportunity cost of increasing tank output from 3,000 units to 4,000 units
d. Say the country's resources become equally specialized at producing both wheat and tanks. What will happen to its production possibility curve
2. Monthly Rent Quantity Demanded Quantity Supplied
(Thousands) (Thousands)
$800 30 10
$1,000 25 14
$1,200 22 17
$1,400 19 19
$1,600 17 21
$1,800 15 22
- Graph the demand and supply curves
- Find the equilibrium price and quantity
- Suppose a tornado destroys a significant number of apartment buildings, but doesn't affect people's desire to live there. Illustrate on your graph the effects on equilibrium price and quantity and write your explanation here
3. You're given 2 equations: (1) Q = 100 - 5P; (2) Q = 50 + 5P;
a) Identify which equation represents the demand curve and which represents the supply curve
b) Solve for equilibrium price and equilibrium quantity