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Alexandra Flaming
ECO 202-C02
February 19, 2020
Instructor Wendy Lewis
Module 1: Written Homework
1. Answer the following questions about opportunity costs:
a. Define opportunity costs. The highest-valued, next best alternative that must be
sacrificed to obtain something or to satisfy a want.
b. If you receive a free ticket to a concert for your favorite music artist, what is your
opportunity cost of attending the concert? The opportunity cost of attending the
concert will be my next alternative. I might have to give up my swimming exercise and
my opportunity cost would be weight gain from lack of exercise.
c. Suppose you own a printing/graphics business that provides professional printing
and marketing services and web design to your customers. What might be an
example of an opportunity cost that your business might experience? Not having
enough employees and not getting the work done causing the machines to break down
and mechanic don’t show up to work. At the busy environment, we need employees that
come to work and get the job done. Opportunity cost would be closing the business for a
while.
2. Answer the following questions about a production possibilities curve:
a. Why does the production possibilities curve have a shape which bows outward? The
fact that opportunity cost of additional units of a good generally increases as people
attempt to produce more of that good. This accounts for the bowed outward shape of the
production possibilities curve.
b. Given the following example of a production possibilities curve for the two goods,
why would you not choose point A? Point A is hiding inside the curve and it is not a
valid resource. The point must fall into the curve line.
c. Given the following example of a production possibilities curve for the two goods,
why would you not choose point X? Point X is outside the curve line and it is not
consider a resources because point X need more resources to be obtainable.
3. Define both terms and explain the difference between microeconomics and
macroeconomics. Is gross domestic product a microeconomic or macroeconomic question?
Is the price change of pizza a microeconomic or macroeconomic question? Microeconomics
is the study of decision making undertaken by individuals or households and by firms.
Macroeconomics is the study of the behavior of the economy as a whole, including such
economywide phenomena as changes in unemployment, the general price level, and national
income. Gross domestic product is macroeconomic question. The price change of pizza is
microeconomics question.
4. The following is a table showing demand and supply in the snow ski market. Draw a graph
of supply and demand for yourself and then answer the following 3 questions.
Price
Quantity
Quantity
