Hand in hard copy! Do not submit answers on line through SPARK!
Note that there are two types of problems. You are encouraged to work with someone else in your TA section on the quantitative problems (1, 2); hand in one set of answers to this problems with both your names. Do the essay questions individually (3, 4, 5) and append separate answers with each person’s name for these along with your group answers to the quantitative problem. Type your answers; staple pages together.
Total 20 points.
1. (6 points) Production Possibility Frontiers: Sugar or pot?
a. (2 points) Draw a production possibilities curve for a Jamaican farmer on 10 acre farm between growing sugar and marijuana. Is there a tradeoff between these two? Why? How is the tradeoff shown in your graph?
There is tradeoff between the two because you can get more one thing by giving up other thing. Since there is place limitation, 10 acre, you cannot grow as many as you want for both Sugar and marijuana. For instance, you can get more sugar by giving up certain amount of marijuana. Inversely, if you give up certain amount of sugar, then you can get more marijuana. And the graph shows this tradeoff in downward figure. When one thing goes down, that amount of other thing goes up.
b. (2 points) What happens to the production possibilities frontier if irrigation is provided for the farm? (Assume both crops benefit but sugar benefits more.) What happens if there is a pest that is bad for sugar but has no effect on marijuana?
The possibilities frontier will not be changed on both cases. Both irrigation and pest will change the efficient of farms, but it does not affect the production possibilities frontier. Because there is place limitation, the amount of crops that farmer can grow is limited. Even if irrigation or marijuana is helpful or harmful for crops, the place limitation will not be changed.
c. (2 points) Hoping to raise pot prices, the US...