Unit 1 Assignment Essay

971 Words Sep 27th, 2013 4 Pages
Problem #1: Using either a graph or table (Refer to page 22 for help with graphs and tables) use two goods to construct a production possibilities curve. Clearly explain what a variety of different points on the curve mean. What would make the curve expand or contract? Why is efficiency lost at the extremes, as when substantially more of one good and very little of another is produced?

Cars (1000's/year) Milk (1000's of gallons/ year)
0 60
1 50
2 30
3 0

The PPF illustrates a negative slope which indicates larger quantities of cars correspond to a smaller amount of milk, and vice versa. This happens because all the economy's resources are already in use, and therefore obtaining more cars would always require sacrificing some milk.
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If an agency had to determine the prices of diamonds that are sold on eBay the prices could increase because the seller would have to ensure that the diamonds are real and as a result they would have to spend money on having the diamonds appraised in addition to providing the customer with paperwork about the diamond, which may not have been required by an individual seller. However, for used or damaged diamonds the seller may lose money because they could not set a price for them like they can for new diamonds.

Problem #3: Read the “LAST word” feature on markets for human organs on Page 66 of your text. Next, select a social problem where free markets are not allowed to function and describe how free market features could be introduced to help alleviate the problem. As part of your answer also include a discussion of the risks of introducing market mechanisms in situations where ethical issues are present. Your answer should be approximately two pages long and in APA format.

The legalization of marijuana has been on the forefront of many ongoing debates and has been a topic that always loses to the regulated government market system. The war on drugs is an expensive battle, there are an extensive amount of resources that goes into catching those who buy or sell illegal drugs. Marijuana which is highly used and no more harmful than currently legal drugs such as tobacco and alcohol has caused many people to think that since this drug

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