Econ 162-A1, A2
Fall 2023
Kenny Christianson
due: September 1
PROBLEM SET NUMBER ONE
Please submit a hard copy of this problem set to your section folder in front of the class at the
beginning of class on Friday, September 1. Late or online submissions will not be accepted.
1. This week, the Barbie movie has become the highest grossing film of 2023. (See, for
example, https://www.hollywoodreporter.com/movies/movie-news/barbie-box-office-passessuper-mario-bros-movie-1235573712/ .
Since its introduction in 1959, Barbie has become an iconic symbol of American culture. In
economics we build models. Barbie has long become an influential model of what American
women should look like.
To explore these issues, please visit the following web sites:
https://time.com/barbie-new-body-cover-story/
https://time.com/6289864/barbie-time-cover-story/
then answer the following questions:
a. What are the benefits and costs to American society of using Barbie as a model?
b. Through the Barbie movie and new dolls, how is Mattel trying to resurrect Barbie?
c. How is the change in the Barbie model likely to affect the market for Barbie and the
market for dolls?
2. One morning, exactly at sunrise, a Buddhist monk began to climb a tall mountain. A narrow
path, no more than a foot or two wide, spiraled around the mountain to a glittering temple at the
summit. The monk ascended at varying rates of speed, stopping many times along the way to
rest and eat dried fruit he carried with him. He reached the temple shortly before sunset. After
several days of fasting and meditation he began his journey back along the same path, starting at
sunrise and again walking at variable speeds with many pauses along the way. His average
speed descending was, of course, greater than his average climbing speed. Prove that there is a
spot along the path that the monk will occupy on both trips at precisely the same time of day.
3. Determine the opportunity costs of the following activities to the relevant party:
a. You drink on a Friday night.
b. You buy a sandwich at Subway.
c. You open a Subway franchise in your hometown.
d. You go to college.
e. NASA sends a person to Mars.
f. The FDA approves a new cholesterol drug.
4. Suppose that you have twenty-four hours to devote to reading chapters of your math textbook
or watching reruns of South Park on DVD. Suppose that it takes you four hours to read one
chapter of your math textbook, and an episode of South Park is one-half hour.
a. Draw your PPC for the weekend. Put episodes of South Park on the vertical axis and chapters
of math on the horizontal axis.
b. What point would you choose? Why? Show on your graph from a).
c. What is the opportunity cost of one chapter of math?
d. How would the PPC change if you had only twelve hours? Show graphically.
5. Assume that the economy of Fruitland can produce two goods, apples (A) and bananas (B).
The production of one apple requires one unit of labor (L) and two units of capital (K). One
banana requires two units of labor and one unit of capital. Fruitland is endowed with 300 units
of labor and 300 units of capital.
a. Draw the production possibilities frontier (curve) for Fruitland. Put apples (A) on the
vertical axis. (HINT: For every 10 apples, determine how many bananas can be produced. How
many apples and bananas can be produced if all resources are devoted to apples? If 10 less
apples are produced, how many bananas can be produced? 20 less? Etc. Construct a table, and
then graph it. It is helpful to include in your table the resources being devoted to the production
of each good as well as the total amounts of labor and capital being used.)
b. Is the production of 100 apples and 100 bananas feasible? Efficient?
What about 120 apples and 120 bananas?
c. What can be said about the utilization of resources when 50 apples and 50
bananas are produced?
d. What is the opportunity cost of increasing the production of apples from 140
to
150? From 0 to 10 units?