2:29 Name: Homework 1 Date: . 59 Class: Chapters: 1-2 This assignment relates to following learning outcomes: calculate the slope of a line or curve in macroeconomics explain the individual's economizing problem and how trade-offs, opportunity costs, and attainable combination can be illustrated with budget lines Follow the instructions below to complete the assignment. Instructions: Once you've read Chapter 1: Limits, Alternatives, and Choices and Chapter 1 Appendix: Graphs and Their Meaning then read the scenario and find the solutions to the problems. Scenario: Suppose that you are on a desert island and possess exactly 20 coconuts. Your neighbor, Friday, is a fisherman, and he is willing to trade 2 fish for every 1 coconut that you are willing to give him. Another neighbor, Kwame, is also a fisherman, and he is willing to trade 3 fish for every 1 coconut. Problems: 1. On a single figure, draw budget lines for trading with Friday and for trading with Kwame. (Put coconuts on the vertical axis.) Note: The budget line from trading with Friday (or Kwame) features a set of attainable combinations of coconuts and fish. 2. What is the slope of the budget line from trading with Friday? Show computations. 3. What is the slope of the budget line from trading with Kwame? Show computations. Note: Recall that, generally, the slope of a straight line equals the rise over the run of the ratio (the vertical change (the rise) to the horizontal change (the run) between any two points of the line). The slope of the budget line from trading with Friday will imply that for every coconut you give up, Friday must give up some certain amount of fish. Or, for every fish that Friday gives up, you must give up some certain amount of coconut. -prod-fleet02-xythos.content.blackboardcdn.com 2:29 .ll . 59 Kwame) features a set of attainable combinations of coconuts and fish. 2. What is the slope of the budget line from trading with Friday? Show computations. 3. What is the slope of the budget line from trading with Kwame? Show computations. Note: Recall that, generally, the slope of a straight line equals the rise over the run of the ratio (the vertical change (the rise) to the horizontal change (the run) between any two points of the line). The slope of the budget line from trading with Friday will imply that for every coconut you give up, Friday must give up some certain amount of fish. Or, for every fish that Friday gives up, you must give up some certain amount of coconut. 4. Which budget line features a larger set of attainable combinations of coconuts and fish? Note: Recall that the opportunity costs can be found by comparing any two of the trading alternatives for the two goods. 5. If you are going to trade coconuts for fish, would you rather trade with Friday or Kwame? Why? 2 AA .content.blackboardcdn.com