1.In Mexico each unit of resource can produce either one professional computer or 3 computer games.Mexico has 30 units of this resource.

a) Draw Mexico's production possibilities curve.

b) What is the opportunity cost of on professional computer?

c) Is the production of professional computers subject to constant or increasing opportunity cost?

d) Which of the goods being produced is considered a capital good?

e) In the absence of trade, should Mexico increase production of professional computers or computer-games if it desires more rapid economic growth?

2. Label each of the following statements as a positive or a normative statement.

a) 15% of the Americans are living under poverty level.

b) The unemployment rate last month was 4.5%

c) It is not good for the federal government to create budget deficit.

d) Inflation rate has been rising for the last two years.

e) Government should try to reduce inequality in the distribution of income.