10:49 F O Intro to Microec... .. . ASSIGNMENT 1 STUDENT NAME:..... ...cess..ID NO.:......... 1. Which of the following are macroeconomic topics / issues and which are microeconomic ones? a. The level of consumer spending . . Micro / Macro b. Subsidies paid to farmers . .. Micro / Macro C. The level of the UK exports .... Micro / Macro d. The price of DVDs . .. Micro / Macro e. The rate of unemployment . ..Micro / Macro f. The average wage rate paid to textile workers ..... Micro / Macro g. The total amount spent by UK consumers on clothing and footwear Micro / Macro h. The amount saved last year by UK households . ..... Micro / Macro 2. Economists assume that economic decisions are made rationally. In the case of consumers, rational decision making means that: a. Consumers will not buy goods which increase their satisfaction by only a small amount. True / False b. Consumers will attempt to maximize their individual satisfaction for the income they earn. True / False c. Consumers buy the sorts of goods that the average person buys ..... True / False d. consumers seek to get the best value for money from the goods they buy True / False 3. A country is capable of producing the following combinations of goods and services per period of time, assuming that it makes full use of its resources of land, labor and capital. Goods (units) 100 80 60 40 20 0 Services (units) 50 90 120 140 150 (a) Draw the production possibility curve for this country on the following diagram. O O10:49 Intro to Microec... a . . . 70 units of goods and 90 units of services. . Yes/ No 40 units of goods and 100 units of services .. .. Yes/ No (c) What is the opportunity cost (in terms of services) of producing 20 extra units of goods when this country is initially producing: (i) 60 units of goods .. 20 units of goods ........ 2 4. (a), Referring back to question 3, assume now that technological progress allows a four-fold increase in the output of goods and double the amount of services for any given amount of resources. Assuming that the country's total amount of resources stays the same, fill in the new figures on the following table to show the new production possibilities. Goods (units) Services (units) (b]. Draw the new production possibility curve in the space provided below (d) How has this technological progress affected the opportunity cost of a unit of goods? (Tick the correct one of the following answers). (a) Stays at the same. (b) Doubles (c) Halves (d) Increases four times (e) Decreases four times O O