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Atlantis ' Production Possibilities Curve - Assignment 1 | ECON 206, Assignments of Microeconomics

Material Type: Assignment; Class: Prin of Microeconomics; Subject: Economics; University: Shepherd University; Term: Spring 2009;

Typology: Assignments

Pre 2010

Uploaded on 08/18/2009

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THE PROBLEMS BELOW ARE DUE FOR HOMEWORK ON THURSDAY, JANUARY 22
You may write your answers in the spaces provided on this sheet. If you need extra space, use
the backs of pages.
Procedures for homework - You may use any written sources you want and work
together to solve these problems, but must write up the answers yourself. If it is clear that two or
more people have copied answers, I will divide the number of points received (out of 40
maximum points) evenly between all those who have copied. Please make a copy of your
homework answers before you turn them in just in case I misplace your homework. This is
especially important if you turn in homework late.
Late homework - Homework is due during class on the designated day. If I receive your
homework after the day it is due, TWO POINTS WILL BE DEDUCTED FOR EACH DAY
LATE (INCLUDING WEEKENDS). No homework will be accepted after we discuss the
answers or after I return graded homework, whichever occurs earlier. No excuses will be
accepted for late homework.
If you must miss class, you can drop your homework off at my office (or put in my
mailbox), give it to someone who is coming to class, FAX it to me at 304-876-5193, or attach it
to an e-mail: lkinney@shepherd.edu.
TOTAL POINTS = 40
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THE PROBLEMS BELOW ARE DUE FOR HOMEWORK ON THURSDAY, JANUARY 22

You may write your answers in the spaces provided on this sheet. If you need extra space, use the backs of pages. Procedures for homework - You may use any written sources you want and work together to solve these problems, but must write up the answers yourself. If it is clear that two or more people have copied answers, I will divide the number of points received (out of 40 maximum points) evenly between all those who have copied. Please make a copy of your homework answers before you turn them in just in case I misplace your homework. This is especially important if you turn in homework late. Late homework - Homework is due during class on the designated day. If I receive your homework after the day it is due , TWO POINTS WILL BE DEDUCTED FOR EACH DAY LATE (INCLUDING WEEKENDS). No homework will be accepted after we discuss the answers or after I return graded homework, whichever occurs earlier. No excuses will be accepted for late homework. If you must miss class, you can drop your homework off at my office (or put in my mailbox), give it to someone who is coming to class, FAX it to me at 304-876-5193, or attach it to an e-mail: lkinney@shepherd.edu. TOTAL POINTS = 40

  1. Atlantis is a small, isolated island in the South Atlantic. The inhabitants grow potatoes and catch fresh fish. The accompanying graph shows the maximum annual combinations of potatoes and fish that can be produced.

Atlantis' Production Possibilities

Curve

0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 0 100 200 300 400 500 600 700 800 900 1000 1100 Quantity of Potatoes (lbs.) Quantity of Fish (lbs.) a. Mark the combination 500 lbs. of fish and 800 lbs. of potatoes on the graph as point A. Comment on Atlantis’ ability to produce this combination. (4 points).

  1. Until 2008, overall world production and incomes were increasing rapidly. As a result, people worldwide were using much more energy, including oil. Thus, they were buying more oil on world markets. Since oil is the primary input used to produce gasoline , this had an impact on the market for gasoline. Finally, the market for sports utility vehicles (SUVs) was affected. Use demand and supply diagrams to show what impact rising world production and incomes had on equilibrium price and quantity in the markets for: a. oil. b. gasoline. c. SUVs (sports utility vehicles). Draw a demand-supply diagram for each market to illustrate what happens Indicate :  which curve shifts  why that curve shifts ( points off if no explanation given ).  what happens to equilibrium price and quantity ( points off if not clearly labeled or indicated ). (27 points) a. Oil market

b. Gasoline market c. SUV market