macroeconomics 1150

Assignment #1 (20 marks) Due: Friday, September 25, 2020 - late assignments will not be accepted. . A simple economy has 100 workers and produces only two goods - coffee and doughnuts. Labour is the only factor of production, but some workers are better suited to producing coffee than doughnuts (and vice versa). The table below shows the maximum amount of output of each good possible from various levels of labour input. Number of workers Monthly production of coffee Number of workers Monthly production of producing coffee (hundreds of pounds) producing doughnuts doughnuts (hundreds) 0 0 100 600 25 20 75 550 50 50 50 400 75 75 25 150 100 80 bl On graph paper, plot the production possibilities frontier for this economy. (2 marks) If the cconomy is currently producing 2000 pounds of coffee (20 hundreds) and 55 000 doughnuts (550 hundreds), what is the opportunity cost of producing another 3000 pounds (30 hundreds) of coffee? (2 marks) c) Can this economy produce 40 000 doughnuts and 4000 pounds of coffee? Explain. (2 marks) d) Can this economy produce 30 000 doughnuts and 6500 pounds of coffee? Explain. (2 marks) Suppose that the technology used to produce coffee improves so that the maximum amount of coffee produced from any given amount of labour increases by 10%. Illustrate on graph paper what happens to the production possibilities curve. (2 marks) 2. Suppose one factory produces jeans and jackets. The following scenarios describe various straight-line production possibilities boundaries for this factory. Each scenario describes the number of jeans that could be produced in one day if all of the factory's resources were devoted to producing jeans, and the number of jackets that could be produced in one day if all of the factory's resources were devoted to producing jackets. For each scenario, calculate the opportunity cost to the factory owner of producing one more jacket. (2 marks each - there should be five separate calculations.) 1000 pairs of jeans; 250 jackets 500 pairs of jeans; 500 jackets 1200 pairs of jeans; 400 jackets d) 942 pairs of jeans; 657 jackets 450 pairs of jeans; 600 jackets Notes: Show all of your calculations and explain your steps, When drawing graphs, try to be as accurate as possible; poorly drawn or inaccurate graphs will lose marks. You can think about the assignment in a group, but you have to convince me that you wrote the answer alone; copied assignments will receive zero