7. ECONOMICS 201. MICROECONOMICS ASSIGNMENT 1 FALL 2019

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ECONOMICS 201
MICROECONOMICS ASSIGNMENT 1 FALL 2019

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1. There are no calculations
2. There are no calculations
3.
a)
Figure 1: The point A and B in PPF
(Source: Kreps, 2019)
b)
Marginal cost of wheat = (120000-105000)/(89000-80000)=1.67 t canola
c)
Marginal benefit of canola= (120000-105000)/(89000-80000)= 1.67t Wheat
4.

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Figure 2: The allocative efficiency
(Source: Iossa & Martimort, 2015)
5)
a)Firm 1
Opportunity cost of 1 kale= (200/80)kg= 5/2 kg
Opportunity cost of 1 tomato= ( 80/200) kg= 2/5 kg
Firm 2
Opportunity cost of 1 kale= (90/150)kg = 3/5 kg
Opportunity cost of 1 tomato= (150/90)kg= 5/3 kg
Firm 1 has comparative advantage in tomato while firm 2 has comparative advantage in kale.
b)

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Figure 3: the ppfs before the trade
(Source: Postlewaite, 2016)

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Figure 4: PPF after trade
(Source: Dwivedi, 2016)
c) No graph or calculations.
6)
Figure 5: The changes in the supply curve

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(Source: Martimort et al. 2015)
7)
Figure 6: rightward shift in the supply curve (Technological improvement)
(Source: Postlewaite, 2016)

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Reference
Dwivedi, D. N. (2016). Microeconomics: Theory and Applications. Vikas Publishing House,
pp. 124-179.
Iossa, E., & Martimort, D. (2015). The simple microeconomics of public‐private
partnerships. Journal of Public Economic Theory, 17(1), 4-48.
Kreps, D. M. (2019). Microeconomics for managers. Princeton University Press, pp.45-49.
Martimort, D., Menezes, F., Wooders, M., Iossa, E., & MARTIMORT, D. (2015). The
Simple Microeconomics of Public-Private Partnerships. Journal of Public Economic
Theory, 17(1), 4-48.
Postlewaite, A. (2016). Report of the Editor: American Economic Journal:
Microeconomics. American Economic Review, 106(5), 736-39.