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HW # 1 Econ 4.3 Name: _______________________________ Date: _______________ (Last) (First) (Initial)NOTE: LATE ASSIGNMENTS ARE NOT ACCEPTED FOR ANY REASON!
2.2 $18,500 average salary minus $2,000 in army wages = $16,500 value of output lost per soldier. Total loss per year to France is $16,500 times 150,000=$247,500,000. 2.4. (a) When Workland is at point E on the PPC, it has 10 units of consumption goods and 4 units of capital goods. Workland's economic opportunity cost of capital goods at point E is 10 units of consumption goods for 4 units of capital goods, or an average cost of 2.5 consumption goods for each unit of capital ((10 consumptions goods/4 capital goods)=2.5 consumption goods). (b) When Playland is at point B on the PPC, it has 19 units of consumption goods and 1 unit of capital goods. If it had selected to have 0 units of capital goods and put all its resources into production of consumption goods, it could have had 20 units of consumption goods. So the economic opportunity cost of having 1 unit of captial goods at point B for Playland is 1 unit of consumption goods. (c) Initially, the PPC's for Workland and Playland were the same. But Workland was accumulating more capital than Playland, so it's productive potential was increasing more rapidly than in Playland. 50 years later the PPC for Workland would be greater than for Playland--it would have shifted upward and to the right, compared to Playland.