QUESTIONS PRODUCTION POSSIBILITIES CURVE AND OPPORTUNITY COST Question 1: A production possibilities table for two products, rice and coconuts, is found below. Usual assumptions regarding production possibilities are implied. Due to the limited resources and technology, as this country increases production of one good it must decrease production of the other good. A. Construct a production possibilities curve from the above information phacing rice on the vertical axis and coconuts on the horizontal axis. B. What is the opportunity cost of producing: i. 600 pounds of coconuts instead of zero of coconuts? ii. 1600 bushels of rice instead of 800 bushels of rice? DEMAND, SUPPLY AND MARKET EQUILIBRIUM Question 2: Suppose that the following market supply and demand schedules for Maine lobsters in United States: a. Plot the demand and supply curve using these schedules for Maine lobsters in United States. Indicate the equilibrium price and quantity on your diagram. b. For each price level, is there a surplus or a shortage in the market? If there is a surplus or shortage, how does it effect to the price changes? c. Suppose that Maine lobsters supply increased by 300 pounds at each price of lobsters. Calculate and plot the new supply schedule and indicate the new equilibrium price and quantity on your diagram Question 3: Show in a diagram the effect on the demand curve, the supply curve, the equilibrium price, and the equilibrium quantity of each of the following events. a. The market for bread rolls. Case I: People realize how fattening bread rolls are. Case II: People have less time to make themselves a cooked breakfast. b. The market for the Economics text book. Case I: Your Professor, Mr. Uctu, makes it required reading for all of his students. Case II: Printing costs for textbooks are lowered by the use of synthetic paper