Homeworks should be submitted at the beginning of the class:

1. Homework 1: Due date: February 3, 2012

|Corn | |Cloth |
|(pounds per | |(yards per |
|month) | |month) |
|3.0 |and |0 |
|2.0 |and |2 |
|1.0 |and |4 |
|0 |and |6 |

Part A:

1. Jane’s Island’s production possibilities are given in the table. What are Jane’s opportunity costs of producing corn and cloth at each output in the table?

2. Joe’s production possibilities are given in the table to
|Corn | |Cloth |
|(pounds per | |(yards per |
|month) | |month) |
|6 |and |0 |
|4 |and |1.0 |
|2 |and |2.0 |
|0 |and |3.0 |

the right. What are Joe’s opportunity costs of producing corn and cloth at each output in the table?

3. In problems 1 and 2, Jane’s Island produces and consumes 2 pounds of corn and 2 yards of cloth. Joe’s Island produces and consumes 2 pounds of corn and 2 yard of cloth. Now the islands begin to trade. a. What good does Jane sell to Joe and what good does Jane buy from Joe? b. If Jane and Joe divide the total output of corn and cloth equally, what are the gains from trade?

Part B: Chapter 2, Problems 1, 18

2. Homework 2: Due date: February 10, 2012 Chapter 3, Problems 10, 23, 26

3. Homework 3: Due date: February 24, 2012 Chapter 4, Problems 10, 11, 16 Chapter 6, Problems 6, 11, 13

4. Homework 4: Due date: February 27,