6. Identify the points on the above graph that are efficient. Why are these efficient? 7. What does the PPF look like when resources are homogeneous? B. How does an increase in labor productivity change the PPF? 9. Define the term Opportunity Cost. 10. What causes increasing opportunity costs? 11. Using the information below, what is the opportunity cost of a pound of beef when production is increased from 100 lbs/month to 200 lbs/month? Beef (Ibs/month) |Wheat (bushels/month) 0 2,000 100 1,600 200 900 300 0 Module 3 - Supply, Demand and Elasticity 1. Explain the "Law of Demand" using a demand curve to illustrate the concept. 2. Describe and illustrate a case where there is an increase in demand. Be sure to identify the market being analyzed and the event leading to the increase in demand. B. As income increases, the demand for used cars decreases. Is a used car a normal good or an inferior good? Explain. 4. Does a change in the price of a good cause a change in demand or a change in quantity demand? Explain. 5. Explain the "Law of Supply" using a supply curve to illustrate the concept. 6. Describe and illustrate a case where there is a decrease in supply. Be sure to identify the market being analyzed and the event leading to the decrease is supply. 7. Does a change in the price of a good cause a change in supply or a change in quantity supplied? Explain. B. If the price in the market is $10, is the market in equilibrium? Explain. How will the market adjust to reach equilibrium