Economics 1201-806 Fall 2024 Homework #1Haskell

Java Python Economics 1201-806

Fall 2024

Homework #1

Due September 12, 2024, by 2:00 p.m.

Please complete all parts of the five questions included on this assignment.

1. Chinese Production (35 points – all parts are worth 5 points apiece)

The following production possibilities table data represent the amount of electric

vehicles and gas vehicles produced in China in a given day.

Option Gas Vehicles Electric Vehicles

A        400,000             0

B        300,000    25,000

C        200,000    50,000

D        100,000    75,000

E                  0  100,000

a. Plot the above options as a production possibilities curve, placing electric vehicle on the x-axis and gas vehicles on the y-axis.

b. What is the numerical value for the y-intercept on this graph?

c. Solve for the slope between each point, or option, on the graph.

d. State the cost ratio of electric vehicles to gas vehicles between each point, or option, on the graph.

e. Does the Law of Increasing Opportunity Costs hold in this example?  Explain why or why not.

f. Show a point of inefficiency on your graph.  Label this as I.

g. Show a point that is currently unattainable on your graph.  Label this as U.

2. Canadian Production (15 points)

The following production possibilities table data represent the amount of electric

vehicles and gas vehicles produced in Canada in a given day.

Option Gas Vehicles Electric Vehicles

A    600,000                0

B    450,000       75,000

C    300,000     150,000

D    150,000     225,000

E               0 Economics 1201-806 Fall 2024 Homework #1Haskell     300,000

a. Plot the above options as a production possibilities curve, placing electric vehicles on the x-axis and gas vehicles on the y-axis.

b. Solve for the slope between each point, or option, on the graph.

c. State the cost ratio of electric vehicles to gas vehicles between each point, or option, on the graph.

3. Trade (35 points)

Suppose that China and Canada are considering trading electric vehicles and gas

vehicles with one another.  Using the production possibilities tables from the previous

two questions, answer the following parts.

a. Which nation has an absolute advantage in the production of electric vehicles?

b. Which nation has an absolute advantage in the production of gas vehicles?

c. Which nation has a comparative advantage in the production of electric vehicles?

d. Which nation has a comparative advantage in the production of gas vehicles?

e. What is a terms of trade ratio that will be mutually beneficial to both nations?

f. Based upon the terms of trade ratio you identified in part e, draw the trading possibilities line on the graph for China from problem #1.

g. Based upon the terms of trade ratio you identified in part e, draw the trading possibilities line on the graph for Canada from problem #2.

4. Statement Identification (10 points – all parts are worth 5 points apiece)

Given the following statements, identify which one is a positive economic statement

and which one is a normative economic statement.

i) The U.S. trade deficit in July 2024 was more than the June 2024 trade deficit,

due to imports increasing more than exports between the two months.

ii) The U.S. trade deficit will continue an upward trend for the remainder of 2024.

5