Reference no: EM133918409

Problem

A student has a monthly budget of $120 to spend on either burritos, which cost $6 each, or sodas, which cost $4 each. Draw the student's budget constraint. Put burritos on the x-axis and sodas on the y-axis.

I. Answer the following questions for the graph above.

i. What is the largest number of burritos that the student could afford to purchase in one month?

ii. Indicate a bundle that is unaffordable by labeling a point 'A.'

iii. Indicate a bundle that is inefficient by labeling a point 'B.'

iv. What is the equation for the student's budget constraint? In your equation, use B as the variable to represent the quantity of burritos and S to represent the quantity of sodas.

II. Answer the following questions about Josh. Josh has $20 to spend and could buy 40 nails (if he spends
III. all $20 on nails) or 10 bolts (if he spends all $20 on bolts).

i. Write Josh's budget constraint. In your equation, use N as the variable to represent the quantity of nails and B to represent the quantity of bolts.

ii. What is the opportunity cost of a nail?

iii. What is the opportunity cost of a bolt? Get the instant assignment help.

iv. How many nails and how many bolts would Josh have if he spends $12 on nails and the remainder on bolts?

IV. Answer the following questions about the Production Possibility Frontier for the country Z producing 2 groups of goods, cell phones and clothing.

i. What is gained when country Z moves from B to C?

ii. What is given up when country Z moves from B to C?

iii. What is the opportunity cost of producing the first two cell phones?

iv. What is the opportunity cost of producing the last two cell phones?

v. What happens to the opportunity cost of cell phones as country Z produces more of them?

V. Answer the following questions about the Production Possibility Frontier for the country Z producing 2 groups of goods, cell phones and clothing.

i. Suppose country Z is producing at point F. How many more cell phones could it produce to reach efficiency?

ii. Suppose country Z is producing at point F. How many more items of clothing could it produce to reach efficiency?

iii. Aside from point F, list a point that is not efficient.

VI. If I roll a 5, I will reroll.

VII. Draw a smiley face.