Questions:
Read each question carefully. You may use a table or graph to help visualize and support your answer. Answers are to be in "essay" form. Make sure you answer each question completely. Space is provided for your responses.
Question 1.Identify whether each of the following transactions takes place in the factor market or the product market.a. Billy buys a sofa from Home Time Furniture for his new home.b. Home Time Furniture pays its manager her weekly salary.c. The manager buys dinner at Billy's Café.d. After he pays all of his employees their wages and pays his other bills, the owner of Billy's Café takes his profit.
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Question 2.List the opportunity costs of the following:a. going to collegeb. missing a lecturec. withdrawing and spending $100 from your savings account, which earns 5 percent interest annuallyd. going snowboarding on the weekend before final examinations
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Question 3.Should you go to the movies this Friday? List the factors that affect the possible benefits and costs of this decision.
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Question 4.Farmer Fred could grow wheat and barley. He could grow 75 bushels of wheat or 125 bushels of barley using the same resources on an acre of his land. The price of wheat is $2.00 per bushel and the price of barley $ 0.80. Show the benefits to Fred from specialization. What should he specialize in?
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Question 5.Given the following production possibilities curve:
a. Does this production possibilities curve show increasing opportunity costs? Explain.
b. What is the opportunity cost of moving from point I to point D (The location on y-axis of I and D is the same)? Explain.
c. What is the opportunity cost of moving from point C to point B?
d.Which of points A-E is the most efficient? Explain.