Peanuts Macroeconomics

CHAPTER 1

Questions:
3. The biggest opportunity cost would come from allocating a square block in the heart of New York City for a surface parking lot. The reason for this is because the value of a square block in the heart of New York City would command a much higher price than one of just a suburb. Therefore, the sacrifice, or opportunity cost, would be greater giving up a block in the heart of New York city.

7. a. Macroeconomics b. Microeconomics c. Macroeconomics b. Macroeconomics e. Microeconomics f. Macroeconomics

8. According to the book, economic resources are natural, human, and manufactured resources that are classified as land, labor, capital, and entrepreneurial ability; all of which are used in the production of goods and services (pg. 426). These resources are also called factors of production because they assist within the production process. They are also inputs because the goods and services are ingredients to help

a.
PRODUCT A B C D E F
Candy Bar 0 4 8 12 16 20
Peanuts 10 8 6 4 2 0

20
Candy Bars

b. Slope is -2 of the budgeted line, the opportunity cost of another candy bar is .5 a bag of peanuts, and the opportunity cost of another peanut is 2 candy bars. With that being said, the opportunity costs are constant, this can be explained by looking at the consumption alternatives chart above.

c. You would have to use your own judgment or preference for candy bars and the peanuts to be able to determine what combination to buy because the budget line and the consumption alternatives does not tell you which of the available combinations to buy.

d. This would increase; the $30 budgeted line would be more prefreable to the old one beacue it allows more consumption of both candy bars and peanuts

20 40
Candy Bars

5.
a.

The specific assumptions this production possibility curve is based upon employment, fixed supplies/resources, technology, and these two