Economics102

Spring 2000

Answers to Homework #1

 

  1. a.  N

b.      N

c.       P

  1. see three for explicit answers; ask your T.A. for help if you have trouble with graphing
  2. a.  y = 4x + 10  and y = -5x + 2

4x + 10 = -5x + 2

9x = -8

x = -(8/9)

y = 2(-8/9) + 10 = 58/9 = 6 4/9          

b.      y = 2x + 2 and y = -2x +8

            2x + 2 = -2x +8

4x = 6

x = 6/4 = 1 1/2

y = 2(1 ½ ) + 2 = 5

c.       x = 6y + 15 and x = -2y + 5

6y + 15 = -2y + 5

8y = -10

y = -10/8 = - 1 1/4

x = 6(-10/8) + 15 = 7 1/2

d.      x = 2y + 4 and x = -3y + 14

2y + 4 = -3y +14

5y = 10

y = 2

x = 2(2) + 4 = 8

  1. a.  slope = 1, y-intercept = 2 and equation:  y = x + 2

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

  1. a.  A,B,C,D,E,F

b.      G,H,I

c.       A,B,C

d.      increasing opportunity cost

  1. a.  500 units of capital

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

c.       This economy should produce at a point on its PPF that is as close to the capital goods axis as possible.  This choice will result in little consumer goods and thus, people may starve, die or revolt against the regime that insists on too high a growth strategy.  Your answer might also mention whether or not your decision would be different depending upon whether or not you live in a closed economy (one without foreign trade) or an open economy (one with foreign trade).

  1. a.  2 units of food

b.      ½ unit of entertainment

c.       1 unit of food

d.      1 unit of entertainment

e.       entertainment, food

  1. a.  15/4 loaves of bread

b.      4/3 bread

c.       Mike

d.      Fish, bread

e.       18 fish, 60 loaves of bread