# Principles Of Microeconomics Worksheet With Answer Key - Professor Dowell, Cosumnes River College

Name: ____Solutions_____
Cosumnes River College
Principles of Microeconomics
Problem Set 1
Due January 29, 2015
Spring 2015
Prof. Dowell
Instructions: Write the answers clearly and concisely on these sheets in the spaces
provided. Do not attach extra sheets.
1. The following graph shows the production possibilities frontier for a small country in the
Caribbean.
Production Possibilities Frontier
180
160
140
.
120
.
B
100
A
80
60
40
20
0 10 20 30 40 50 60 70 80 90 100
Sugar
a. If the country is currently producing 180 coconuts and 0 sugar, how many coconuts must
they give up to make 20 sugar?
20
b. If the country is currently producing 100 coconuts and 60 sugar, how many coconuts must
they give up to move to 80 sugar?
40
c. Does this country have increasing opportunity costs? Explain how you know that they do or
do not and what it means to have increasing opportunity costs.
Yes. The PPF gets steeper or is bowed out moving from 180 coconuts and zero units of sugar
to zero coconuts and 100 units of sugar. The answers to a and b also illustrate the
increasing opportunity cost.
d. Give an example of a combination of coconuts and sugar that is attainable but not efficient
and an example that is not attainable.
Any point that lies under the PPF, such as point A (representing 100 coconuts and 40 units of
sugar) is attainable but not efficient. Any point above the PPF such as B (representing 120
coconuts and 80 units of sugar) is unattainable.
Principles of Microeconomics: Problem Set 1 Solutions
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