ECONOMCIS 111

FALL 2003

CHAPTER 1 HOMEWORK

NAME:_________________

Use a production possibilities curve to answer the following questions. In each case your diagram should have one curve showing the current condition and then an “after” condition. For every question, the vertical axis is “wheat” and the horizontal axis is “cars.” To answer, just show the diagram, do not discuss.

1. Show the effects of an earthquake that destroys half of the existing factories.

2. Scientists develop new technologies for growing wheat, doubling its output.

3. Nebraska, a farming state, annexes its industrial neighbor, Kansas. Show the effects on the “new” Nebraska production possibilities curve.

4. Russian men stop drinking and go on diets. This increases the average life expectancy from 59 to 70.

5. Because of better information flows, unemployment goes from 10% to zero.

6. Henry Ford V discovers a new auto production technology that doubles the production of cars using the same amount of resources.

7. Global warming melts more of the polar ice cap, and in doing so extends the growing season for wheat in Alaska.

8. The government passes a law mandating that you save one-half of your income. This makes borrowing costs lower and firms (farms and auto manufacturers) acquire more capital.

9. Half of the working population decides to quit work and take up yoga.

10. Better education increases worker productivity.