MBA-FP6008: Assessment 1, Economics Problem Set 1
Dennis J. Johnson
Capella University
08/12/2015

Problems A, B, and C

Introduction

This assessment will be an analysis of graphed data and changes in supply and demand for three economic problems. Problem A involves production possibilities for consumer and capital goods, problem B is an evaluation of changes in supply and demand equilibrium, and finally, problem C involves pricing with relevance to supply and demand. Successful completion of this assessment demonstrates proficiency in; applying theories, models, and practices of economic theory, analyzing solutions with support from relevant data, resources, references, and economic principles, analyzing graphed and circular flow diagram data, and analyzing changes in supply and demand in a competitive market.

Problem A. Production Possibilities | Type of Production | Production Alternative A | Production Alternative B | Production Alternative C | Production Alternative D | Production Alternative E | Butter | 0 | 1 | 2 | 3 | 4 | Guns | 15 | 14 | 12 | 9 | 0 |

Production Possibilities for Consumer Goods (Guns) and Capital Goods (Butter)

1. The specific assumptions that underlie the production possibilities curve are: that there are only two goods, consumer and capital, that they are produced in different proportions in the economy, the quantities of the resources do not change, production techniques are given and constant, and that resources are used in a technically efficient way. (C. Smriti, The Production Possibilities Curve: Assumption, Uses or Application 2015; amosweb.com 2015). 2. The cost of more butter if the economy is at point C would increase to 12 because the cost of 10 more of butter would equal the cost of 12 guns. The cost of producing more guns would require more butter due to the breakeven point as illustrated