Assignment #1

This assignment relates to the following Course Learning Requirements:  

CLR1: Define economics and explain the basic principles of economics

Objective of Assignment:

The objective of this assignment is to measure your understanding of the role of scarce resources and unlimited wants in economics, your ability to apply the concept of opportunity cost to real world situations, and your ability to construct and use the Production Possibilities Curve model to illustrate economic choice.

Pre-Assignment Instructions:

Complete up-to and including module two, including assigned readings and work.

Assignment Tasks:

There are two questions. Q1 is about the production possibilities curve. Q2 is about opportunity cost.

1. Production Possibilities Curve

Consider a bakery that produces apple dumplings and berry tarts.

Draw your own a production possibilities curve for the two products. The drawing can be either digitally created or an uploaded picture of a hand drawn curve (in either scenario, ensure the information is legible and clear). For this question, you are submitting a graph of the production possibilities curve only with the labels noted below. You do not provide explanations.

1. Label the axis and draw your curve.
   1. Label a point (A), to demonstrate a scenario where more resources are allocated to baking only apple dumplings. (1 points)
   1. Label a second point (B), where more of the resources are allocated to baking only berry tarts. (1 points)
   1. Shade the area of possible production blue. (1 points)
   1. Shade the area outside of the limits of production orange. (1 points)
   1. Suppose all bakers are enrolled in training and their productivity increases.

Draw the change on the graph. (2 points)

• Opportunity cost

Consider the same bakery. With an hour remaining in his shift, the baker has noticed there is a limited amount of sugar remaining (10 cups to be exact).

Given the limited time, the baker can use the sugar to bake pies or brownies, but not both.

Option A: to bake one dumpling, requires 1 cup of sugar and generates profit of $2.5 per pie.

Option B: to bake one berry tart, requires 2 cups of sugar and generates a profit of $4.00 per tart.

1. Determine the opportunity cost of choosing Option A over Option B. (2 points)

Please bold or highlight your answer.

• Determine which option you would choose, and explain why. (2 points)

Please bold or highlight your answer.

Submission Procedures:

• Your assignment should be typed (Calibri or Arial, 12-point font) and submitted as a digital document (e.g., Word, PDF).
• Clearly label each response (1(a), 1(b), etc.).
• For calculations, show all your work to receive full credit.
• Submit your completed assignment by THE DUE DATE ON THE COURSE CALENDAR.

Scoring:    / 10

Weighted total 15% (1.5% per point)

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