Micro Module 1 Homework

Pham can work as many or as few hours as she wants at the college bookstore for $9 per hour. But due to her hectic schedule, she has just 17 hours per week that she can spend working at either the bookstore or at other potential jobs. One potential job, at a café, will pay her $12 per hour for up to 6 hours per week. She has another job offer at a garage that will pay her $10 an hour for up to 5 hours per week. And she has a potential job at a daycare center that will pay her $8.50 per hour for as many hours as she can work. If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore?

6 hours

Suppose that you are on a desert island and possess exactly 20 coconuts. Your neighbor, Friday, is a fisherman, and he is willing to trade 2 fish for every 1 coconut that you are willing to give him. Another neighbor, Kwame, is also a fisherman, and he is willing to trade 3 fish for every 1 coconut. a. On the diagram below, draw budget lines for trading with Friday and for trading with Kwame. (Put coconuts on the vertical axis.) b. What is the slope of the budget line from trading with Friday (coconuts for fish)? c. What is the slope of the budget line from trading with Kwame (coconuts for fish)? d. Which budget line features a larger set of attainable combinations of coconuts and fish? e. If you are going to trade coconuts for fish, would you rather trade with Friday or Kwame?

a. b. -0.5 c. -0.3 d. the budget line from trading with kwame e. kwame

Janice really likes potatoes. At best any other goods are worth less than a dollar to her, potatoes cost $1.10 per pound, and she has $6.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30. a. How many pounds of potatoes will she purchase? b. What if she only had $3.00 to spend?

a. 2 b. 2

Look at the figure below. Suppose that the cost of cheese falls, so that the marginal cost of producing pizza decreases. a. Will the MC curve shift up or down? b. Will the optimal amount of pizza increase or decrease?

a. MC will shift down b. the optimal amount of pizza will increase

Suppose you won $15 on a lotto ticket at the local 7-Eleven and decided to spend all the winnings on candy bars and bags of peanuts. Candy bars cost $0.75 each while bags of peanuts cost $1.50 each. a. Complete the table below (gray shaded cells) showing the alternative combinations of the two products that are available. b. graph c. Does the budget line tell you which of the available combinations of candy bars and bags of peanuts to buy? d. Suppose that you had won $30 on your ticket, not $15. Is the slope of a new budget line flatter, steeper, or the same as in the diagram above? e. Has the number of available combinations increased or decreased? f. What is the slope of the budget line? g. What is the opportunity cost of one more candy bar? h. What is the opportunity cost of one more bag of peanuts? i. Do these opportunity costs rise, fall, or remain constant as additional units are purchased?

a. candy bars- 0, 4, 8, 12, 16, 20 bags of peanuts- 10, 8, 6, 4, 2, 0 b. graph c. no d. the same e. increased f. -0.5 g. .5 bags of peanuts h. 2 candy bars i. remain constant

Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): a. Upon what specific assumptions is this production possibilities curve based? b. If the economy is at point C, what is the (opportunity) cost of 2 more automobiles? c. What is the (opportunity) cost of 6 more forklifts? d. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of available resources? e. Is production at a point outside the production possibilities curve currently possible? f. Could a future advance in technology allow production beyond the current production possibilities curve? g. Could international trade allow a country to consume beyond its current production possibilities curve?

a. full employment, fixed supplies of resources, fixed technology, and 2 goods b. 9 forklifts c. 2 automobiles d. The economy is underutilizing its available resources e. no f. yes g. yes

On average, households in China save 40 percent of their annual income each year, whereas households in the United States save less than 5 percent. Production possibilities are growing at roughly 9 percent annually in China and 3.5 percent in the United States. Use graphical analysis of "present goods" versus "future goods" to explain the differences in growth rates. Instructions: For the following questions, use the diagram on the left. a. Which point, A or B, best represents the combination of present and future goods in the United States? b. Which production possibilities curve best represents future growth in the United States? Which production possibilities curve best represents future growth in the United States? c. Which point, A or B, best represents the combination of present and future goods in China? d. Which production possibilities curve best represents future growth in China?

a. point A b. PPC2 c. point B d. PPC3