Economics

Angela Peterson Assignment 1

Unit 1: Assignment 1

Angela Peterson

Kaplan University

GB540-03: Economics for Global Decision Makers

Dr. Barbara-Leigh Tonelli

July 26, 2012

Angela Peterson Assignment 1

Problem #1: Using either a graph or table (Refer to page 22 for help with graphs and tables) use two goods to construct a production possibilities curve. Clearly explain what a variety of different points on the curve mean. What would make the curve expand or contract? Why is efficiency lost at the extremes, as when substantially more of one good and very little of another is produced?

Type of Production | Production Alternatives | | |

| A | B | C | D | E |

Trucks | 0 | 2 | 4 | 6 | 8 |

Cars | 30 | 27 | 21 | 12 | 0 |

4.5 cars; .33 trucks, as determined from the table. Increasing opportunity costs are reflected in the concave from the origin shape of the curve. This means the economy must give up larger and larger amounts of rockets to get constant added amounts of trucks and vice versa. The economy is underutilizing its available resources. The assumption of full employment has been violated. Production outside the curve cannot occur (consumption outside the curve could occur through foreign trade). To produce beyond the current production possibilities curve this economy must realize an increase in its available resources and/or technology.

Problem # 2 Part A: Go to the internet auction site eBay at www.ebay.com and select the category Jewelry and Watches, followed by Loose Diamonds and Gemstones, and then Diamonds, Natural. How many natural diamonds are for sale at the moment? Note the wide array of sizes and prices of the diamonds. In what sense is there competition among the sellers in this market? How does that competition influence prices? In what sense is there competition among buyers? How does that competition influence prices?

There are 216,632 diamonds for sale as of July 26, 2012. The competition in the market on eBay...