Economics 101

Fall 2000

Answers to Practice Questions #1

 

  1. a.  P
    1. N
    2. P
    3. N

 

  1. if you have trouble with graphing please see your T.A.

 

3.   a.  x = -8/7 and y = 7 5/7

    1. x =  1 and y = 7
    2. x = 9 and y = -2
    3. x = 12 4/5 and y = 2/5

 

  1. a.  The slope is 1, the y-intercept is 2, and the equation is y = x + 2.

b.      The slope is 2/3, the y-intercept is 20/3, and the equation is y = (2/3)x + 20/3.

c.       The slope is 5/8, the y-intercept is –15/2, and the equation is y = (5/8)x + (-15/2).

d.      The slope is undefined, and the equation is x = 0.

 

  1. a.  A, B, C, D, E, F are feasible and obtainable.

b.      G, H, I are infeasible and unobtainable

c.       A, B, C are efficient points

d.      It means that as more and more of one good is produced the opportunity cost of producing that good will increase.  This is due to specialization of resources.

 

  1. a.  500 units of capital good production is the maximum

b.      the slope is –2 if consumption goods are on the y-axis and –1/2 if capital goods are on the y-axis

c.       constant opportunity cost

d.      If growth is your primary objective, then it will be important to produce as high a level of capital goods as possible.  Capital good production will be limited by the minimum level of production of consumer goods necessary for the sustenance of life.

 

      7.  a.  2 units of food

           b.  ½ units of entertainment

           c.  1 unit of food

           d.  1 unit of entertainment

           e.  entertainment, food

           f.    food, food

           g.  entertainment, entertainment

 

       8.  a.  15/4 units of bread

            b.  4/15 units of fish

            c.  4/3 units of bread

            d.  ¾ units of fish

            e.  Mike

            f.  Mike

            g.  Fish, Bread

            h.  18 fish and 60 loaves of bread