1.)

Identify whether each of the following activities takes place in the markets for goods and services or markets for factors of production.

Activity	Markets
Poornima pays a storekeeper $2 for a quart of yogurt.	Goods and Services/Factors of production
Caroline earns $20,000 from her 10% ownership of Acme Industrial.	Goods and Services/Factors of production
Valerie spends $40 to get a haircut.	Goods and Services/Factors of production
Manuel earns $12 per hour working at a salon.	Goods and Services/Factors of production

2.)

Imagine a society that produces military goods and consumer goods, called "guns" and "butter," respectively. The following graph shows the production possibilities frontier for guns and butter.

Guns X C X 4 X B Butter\fO PPF Quantity of Industrial Output PPF Quantity of Agricultural Output? 540 O PPF 450 360 270 INDUSTRIAL ROBOTS (Thousands) 180 90 PPF 0 200 300 500 600 0 100 400 BARLEY (Millions of bushels)