Office Hours 9/29

Hey folks:

I will not be in my office for regular office hours today, September 29. Those hours will be rescheduled for 3:30 - 4:15 on Thursday, and 12:30-1:30 on Friday this week. Thursday office hours (12:30-1:30 are scheduled as usual).

I apologize for any inconvenience.

Answer key to sample problems for test 1

1-A, 2-A, 3-B, 4-A, 5-C, 6-A,
7-B, 8-D, 9-C, 10-C, 11-A, 12-C, 13-B
14-B, 15-D, 16-B, 17-B, 18-A, 19-A,
20-D, 21-C, 22-B, 23-B, 24-C, 25-B, 26-C,
27-B, 28-A, 29-C, 30-A, 31-A,
32-A, 33-D, 34-C, 35-D, 36-A, 37-B,
38-D, 39-C, 40-B, 41-A,
42-C, 43-B, 44-B, 45-C.

You can plot the PPF by treating the combinations of Truck and Corn as "ordered pairs" on the diagram.

A. 10 bushels, 15 bushels, 20 bushels, 25 bushels

B. Opportunity cost is increasing.

C. The combination is feasible but inside the limits of the PPF. The economy is not using its resources efficiently or there is some unemployment and other idle resources.

D. The combination is not feasible. It lies outside the PPF. The way to get to that production point is more resources or better technology. (Be careful, you can trade to get a consumption bundle outside of the PPF, however, the question clearly asks if it is a possible production point. Trade does not enter into this answer.)

Let me know if you think any of these answers is incorrect. There could be a typo or I could have just done the problem wrong.

Good luck.

efficiency

I'm not sure I spelled it out explicitly in class, but from our discussion I said there were several ways economists can use the term "efficiency." So from today's discussion, efficiency was being "on" the budget line. This implies you can't get more of one good without giving up some of the other good. A point inside the budget line is "inefficient" in the sense you can have more of one or the other or both goods without "giving up" anything, except the money (which you need to assume if it is unspent, it is "lost").

We will consider other ways we can make use of the term efficient.

Good luck using your time efficiently. I'm certain, and assume, you do that. Just beware of your opportunity cost. Oh, and sometimes alcohol can inhibit your assessment of your opportunity cost. Be careful out there.

;-)

JJ