Question 1:
Complete these 2 questions (questions 1 and 2) and then submit answers to questions about problem set one on Blackboard.
1) Go to the Problem set button.
2) Then open the problem set submission form folder.
3) Click on the problem set you wish to complete...remember there are deadlines to finish the problem sets.
You will be able to access this form TWICE prior to the deadline date and time (see the Calendar DUE DATE button). My Advice is to submit your answers once, see what you missed, and try to solve where you might have problems. I'd print out the questions the 1st time I access the form.
Given the following chart answer the questions below, assuming that all resources and technology are fixed for this farm.
Corn(bu) Soybeans(bu)
20,000 0
16,000 5000
12,000 9000
8,000 12,000
4,000 14,000
0 15,000
A) Draw the production possibilities frontier. PLACE CORN ON THE Y AXIS
B) Is this farm able to produce 12,000 bushels of corn and 8,000 bushels of soybeans? What does this combination of output suggest about the use of resources?
C) Is this farm able to produce 8,000 bushels of corn and 13,000 bushels of soybeans? What does this combination of output suggest about the use of resources?
D) What happens to the opportunity cost of corn production as the farm produces more corn?
E) What happens to the opportunity cost of soybeans production as the farm produces more soybeans?
F) What is the opportunity cost of expanding soybean production from 12,000 to 14,000 bushels?
G) What would be the opportunity cost of producing an additional 2,000 bushels of soybeans if this farm were currently producing 8,000 bushels of corn and 10,000 bushels of soybeans?
Explain your answer.
H) Suppose Monsanto (a chemical and biological engineering firm) develops a new strain of soybeans that is more disease resistant, heat and drought tolerable such that it increases yields by 15%, what happens to the PPC?
Question 2
Pete's a kid and his weekly allowance is $10. He spends his entire allowance between gummi bears and chocolate.
A price of a pound of gummi bears (GB) is $2.50 and the price of a pound of chocolate is $5.
A) Graph Pete's consumption possibilities curve (between the amount of gummi bears and chocolate). PLACE GUMMIBEARSONTHE X AXIS
B) Can Pete buy the following combinations of gummi bears (GB) and chocolate (C)?
i) 1.5 pounds of GB and pounds of 1.5C
ii) 2 pounds of GB and pounds of 1C
iii) 3 pounds of GB and pounds of 0.75C
C) What is the opportunity cost of Pete's:
i) first pound of gummi bears
ii) second pound gummi bears
iii) last pound of gummi bears
D) How is Pete's opportunity cost of gummi bears shown in the graph you drew in part A?