GB540-04: Economics for Global Decision Makers
Unit 1 Assignment
September 11, 2012
Problem #1:Using either a graph or table (Refer to page 22 for help with graphs and tables) use two goods to construct a production possibilities curve. Clearly explain what a variety of different points on the curve mean. What would make the curve expand or contract? Why is efficiency lost at the extremes, as when substantially more of one good and very little of another is produced?
Type of Production | Production Alternatives |
| A | B | C | D | E |
Trucks | 0 | 2 | 4 | 6 | 8 |
Cars | 30 | 27 | 21 | 12 | 0 |
There would be 4.5 cars; .33 trucks, as determined from the table. An increasing opportunity costs are reflected in the concave from the origin shape of the curve. Meaning that the economy must give up larger and larger amounts of rockets to get a constant added amounts of trucks and vice versa. Therefore the economy is underutilizing all of its available resources. Causing the assumption of full employment to have been violated. All of the production on the outside of the curve cannot occur (consumption outside the curve could occur through foreign trade). To be able to produce beyond the current production possibilities curve the economy must take notice and realize an increase in its available resources and/or technology.
Problem # 2 Part A:Go to the internet auction site eBay at www.ebay.com and select the category Jewelry and Watches, followed by Loose Diamonds and Gemstones, and then Diamonds, Natural. How many natural diamonds are for sale at the moment? Note the wide array of sizes and prices of the diamonds. In what sense is there competition among the sellers in this market? How does that competition influence prices? In what sense is there competition among buyers? How does that competition influence prices?
While I was visiting the...