New Uzbekistan University 2023-2024 Fall Semester econ10 Introduction to Economics Assignment 1

New Uzbekistan University 2023-2024 Fall Semester ECON10
Introduction to Economics Assignment 1
Due date and time:9th of November till @13.00 pm.
Name Surname: Muxammadov Furqatjon Student Number: 230247
Department and Group: FED3
Question 1: Use the following information to work Problems a to f. Italy produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. Suppose that Italy’s production possibilities for ethanol and food crops are as follows:

Ethanol ((barrels per day)	Food crops (tons per day)
70	0
64	1
54	2
40	3
22	4
0	5

1. 
   Draw a graph of Italy’s production possibilities frontier curve (PPF) and explain how your graph illustrates scarcity. (10 points)
   
2. 
   If Italy produces 22 barrels of ethanol a day, how much food must it produce to achieve production efficiency? (2 points)
   

3. 
   Why does Italy face a tradeoff on its PPF? (2 points)
   

4. 
   If Italy increases its production of ethanol from 40 barrels per day to 54 barrels per day, what is the opportunity cost of the additional ethanol? (3 points)
   
5. 
   If Italy increases its production of food crops from 2 tons per day to 3 tons per day, what is the opportunity cost of the additional food? (3 points)
   

6. 
   Does Italy face an increasing opportunity cost of ethanol? (3 points). What feature of Italy’s PPF illustrates increasing opportunity cost? (2 points)
   

Question 2: The table below gives the demand and supply schedules for potato chips.

Price
Quantity demanded

Quantity supplied

(cents per bag) (millions of bags a week)

40	170	90
50	160	100
60	150	110
70	140	120
80	130	130
90	120	140
100	110	150
110	100	160

1. 
   On the same diagram draw the demand and supply curves (label them D0 and S0 respectively). (10 points)
   

2. 
   What are the equilibrium price and quantity? (2 points)
   

3. 
   If the price is 100 cents per bag, is there a (shortage, surplus), and what is the amount of it? (1+2 points) How does the price adjust? Briefly explain. (2 points)
   

4. 
   If the price is 50 cents per bag, is there a (shortage, surplus), and what is the amount of it? (1+2 points) How does the price adjust? Briefly explain. (2 points)
   
5. 
   Suppose a technological advance (improvement) increases the quantity of potato chips supplied at each price by 20 tons per year. (5 points). Write down the new supply schedule after the technological improvement and show on the diagram. (5 points)
   

6. 
   What are the new equilibrium price and quantity? (2 points)
   

Question 3: What is the effect on the equilibrium price of hotdogs and the quantity of hotdogs sold if

1. 
   The price of a hamburger rises? (4 points)
   
2. 
   The price of a hotdog bun rises? (4 points)
   

3. 
   The supply of hotdog sausages increases? (4 points)
   

4. 
   Consumers’ incomes increase if hot dogs are an inferior good? (4 points)
   

5. 
   The wage rate of a hotdog seller increases? (4 points)
   

6. 
   If the wage rate of the hotdog seller rises and at the same time prices of ketchup fall? (5 points)
   

Question 4: Using supply-and-demand diagrams, show the effect of the following events on the market for sweatshirts.

1. 
   A hurricane in South Carolina damages the cotton crop. (4 points)
   

2. 
   The price of leather jackets falls. (4 points)
   

3. 
   All colleges require morning exercise in appropriate attire. (4 points)
   

4. 
   New knitting machines are invented. (4 points)