Daily quiz-4 (01/19): Print your name and ID in BLOCK letters.

1. Daily quiz-4 (01/19): Print your name and ID in BLOCK letters. • A company makes raincoats and umbrellas. Because of technological innovations it becomes three times as productive at making umbrellas and two times as productive at making rain coats. The opportunity cost of producing umbrellas for the company has decreased. (Assume that the company could produce 1 raincoat or 1 umbrella initially with its given resources. Now it can produce 3 umbrellas or 2 raincoats. Opportunity cost of producing umbrella was 1 before, it is now 2/3). • Mike, an Iowan grows soybeans and corns on his land. Mike has a linear PPF. A new type of seed increases the per hectare yield of corn. Draw a hypothetical initial PPF for Mike and show how the PPF changes if Mike uses the new seed ( be a little thoughtful!). Ans: The PPF shifts up in the following way. The intercept on the corn axis increases but the intercept on the soybean axis remains the same. • 3. In the previous example, what has happened to Mike’s opportunity cost of producing soybean? Ans: increased