Directions: Do the problem set on a separate sheet of paper. Take a picture or scan it and upload it into Canvas by clicking the "Start Assignment" button in the Problem Set #1 assignment.

Problem Set #1

The table below lists the different combinations of surfboards and tables that can be produced with a fixed quantity of resources

	Surfboards	Tables
A	0	140
B	50	120
C	90	90
D	120	50
E	140	0

1. 1. Plot the production possibilities frontier
   2. Show a point X that is both feasible and efficient
   3. What is the opportunity cost of moving production from A to B?
   4. What is the opportunity cost of moving production from E to C?
   5. Does this PPF display the Law of Diminishing Returns? Explain

1. A drought destroys many coffee trees. Using a demand and supply diagram, illustrate and explain what happens to the market for coffee.

1. The demand and supply schedule for beef is illustrated in the table below

Price per pound (in USD $)	Quantity Demanded (in thousands of pounds)	Quantity Supplied (in thousands of pounds)
$4.00	120	0
5.00	100	20
6.00	80	40
7.00	60	60
8.00	40	80
9.00	20	100

1. Graph the demand and supply of beef. Label all parts of the graph.
2. What is the equilibrium price and quantity?
3. If the price of beef were $6.00 per pound, would we have a shortage or surplus? How much is the excess?
4. If the price of beef were $9.00 per pound, would we have excess demand or excess supply? How much is the excess?
5. The price of beef changes from $7.00 to $8.00. Calculate the price elasticity of supply and interpret the results.
6. The American Medical Association puts out a report that beef is unhealthy. Show graphically and explain how this may affect the market for beef.

1. The demand and supply schedule for computer engineers is illustrated in the table below:

Wage (per hour in USD)	Quantity Demanded (labor hours)	Quantity Supplied (labor hours)
$40	200	60
50	150	80
60	100	100
70	50	120
80	0	140

1. 1. Graph the demand and supply for computer engineers. Label all parts of the graph
   2. What is the equilibrium wage and quantity?
   3. The US President passes legislation restricting computer engineers' entry from other countries. Show how this might affect the market for computer engineers.
2. Incomes change from $57,000 to $56,000 and the quantity demanded of rooms at Motel 6 changed from 285 to 300. Calculate the income elasticity of demand and interpret your results.