QUESTION 1

Assume Costa Rica and Mexico both produce coffee and electronic goods, as per the PPC provided below:

Costa Rica	A	B	C	D
Quantity of Coffee	0	20	40	80
Quantity of Electronic goods	16	12	8	0

Mexico	W	X	Y	Z
Quantity of Coffee	0	20	50	60
Quantity of Electronic goods	30	20	5	0

In answering each part below, remember to note the formatting instructions for your answers to this question.

For Costa Rica: a.Moving from pt. B to pt. C, the opportunity cost of producing each additional unit of coffee is _________ units of electronic goods

b.Moving from pt.C to pt. B, the opportunity cost of producing each additional unit of electronic goods is _________ units of coffee

For Mexico: c. Moving from pt.X to pt. Y, the opportunity cost of producing each additional unit of coffee is __________ units of electronic goods

d. Moving from pt.Y to pt. X, the opportunity cost of producing each additional unit of electronic goods is __________ units of coffee

QUESTION 2

Given the tables associated with Question 1 about these two countries, select every correct statement (note: there may be a multiple number of correct statements below). Note that there is no partial credit on this question - you must get it completely correct, or your answer is incorrect.

		CostaRica has a comparative advantage in producing coffee
		CostaRica has a comparative advantage in producing electronic goods
		Mexico has a comparative advantage in producing coffee
		Mexico has a comparative advantage in producing electronic goods
		Both Mexico and Costa Rica have a comparative advantage in producing coffee
		Both Mexico and Costa Rica have a comparative advantage in producing electronic goods
		Neithercountry has a comparative advantage in producing coffee
		Neither country has a comparative advantage in producing electronic goods

Question 3.

Brazil and Argentina both produce cars and wheat, as per the PPC provided below.

Brazil	A	B	C	D
Quantity of Cars	0	24	54	60
Quantity of Wheat	40	24	4	0

Argentina	W	X	Y	Z
Quantity of Cars	0	24	40	64
Quantity of Wheat	80	50	30	0

Given the tables associated with this question (above), select the correct statement about the comparative advantage within Brazil and Argentina.

		Brazil has a comparative advantage in producing cars and Argentina has a comparative advantage in producing wheat
		Brazil has a comparative advantage in producing wheat and Argentina has a comparative advantage in producing cars
		Brazil has a comparative advantage in producing both cars and wheat
		Argentina has a comparative advantage in producing both cars and wheat
		Neither country has a comparative advantage in producing cars
		Neither country has a comparative advantage in producing wheat

QUESTION 7

The PPC model helps us better understand the concept of economic growth within an economy. To answer this question, you'll need to read a Federal Reserve Bank of Dallas article entitled "US Economy: Productivity Growth" by Evan Koenig.The article is provided in the "Homework #1 material" folder within "Course Documents" at Blackboard. Note that there is no partial credit on this question - you must get it completelycorrect,or your answer is incorrect.

According to this article, what are the three main (underlying) causes of labor productivity growthwhich arecited in the article:

		increases in the amount of capital per worker
		increases in the quantity of available public transportation
		improvements in technology and the organization of production processes
		increases in income
		improvements in the quality of the workforce
		migration

QUESTION 8

In the Blackboard shell for this course, there's a folder entitled "Homework #1 material" that's located in the Course Documents section of Blackboard. Go to that folder, get the file "Labor Productivity and Economic Growth" and use this file to answer question #8.

Which of the following points does this article make labor productivity and economic growth (note that there can be 1 or more correct answers here).Note that there is no partial credit on this question - you must get it completely correct, or your answer is wrong.

		The main determinants of labor productivity are physical capital, human capital, and technological change.
		Physical capital is affected by changes in the quantity of capital, but changes in the quality of capital affect human capital, not physical capital.
		The economy's aggregate production function is only affected by changes in technology.
		Technological change not only includes new ways of organizing work, but also includes a combination of invention and innovation.
		Increases in the quantities of physical capital, human capital and technology per person lead to a higher standard of living over time.
		Increases in human capital per person can affect GDP, but not GDP per capita.

QUESTION 9

Assume that the country of Ecuador has a production possibilities curve (PPC) for the production of oil and bananas, two goods where Ecuador is a major exporter on the world market. Let's assume their PPC has oil on the vertical axis and bananas on the horizontal axis.

How does an increase in unemployment affect the PPC of Ecuador?

A.

Movement from a point inside this PPC to a point that's on the PPC, but no shift

How would an earthquake which destroys the amount of available land, affecting both oil and banana production within Ecuador, affect Ecuador's PPC?

B.

Movement from a point that's on this PPC to a point inside the PPC, but no shift

How does migration of laborers from Peru into Ecuador affect Ecuador's PPC?

C.

Movement between 2 points, up along the PPC (i.e. toward oil), but no shift

How does increased demand for oil within Ecuador (during a period of full employment) affect the PPC of Ecuador?

D.

Movement between 2 points, down along the PPC (i.e. toward bananas), but no shift

How does automation (technological change) within the oil industry affect Ecuador's PPC?

E.

Increase (shift outward) in the PPC that affects both goods

How does a decrease in the availability of inputs for bananas affect Ecuador's PPC?

F.

Decrease (shift inward) in the PPC that affects both goods

How does an increase in demand for bananas, a change that occurs during a period of full employment within Ecuador, affect the PPC of Ecuador?

G.

Increase (shift outward) in the PPC that affects only oil

How does an increase in the overall capital stock within Ecuador affect their PPC?

H.

Increase (shift outward) in the PPC that affects only bananas

How does a decrease in the productivity associated with producing oil affect Ecuador's PPC?

I.

Decrease (shift inward) in the PPC that affects only oil

J.

Decrease (shift inward) in the PPC that affects only bananas