In this part, we will make two big assumptions. First, farmers only earn income from farming. Second, large farms are more productive than small farms. Specifically, assume that: Farmers who own less than 20 acres earn income of $100 per acre. For example, a farmer with 7 acres of land would earn $700 of income (= 7 acres x $100/acre). Farmers who own 20 acres or more earn income of $500 per acre. For example, a farmer with 25 acres would earn $12,500 (= 25 acres x $500/acre). Assume that the poverty line in Nicaragua in 2007 was $5,000 per household. Calculate and report in Table 3 the various poverty indices before and after the Land Reform policy. (Note: You have to calculate each households' income using the information given above.) Table 3: Poverty Measures Before and After Land Reform [Report your results to 3 decimals; for example 0.123] Before Land Reform Policy After Land Reform Policy Poverty Headcount Index Poverty Gap Index FGT-2

1) A manufacturer of breakfast cereals has the opportunity to purchase barley at $3.00 a bushel for 10,000 bushels, if it also buys 5,000 bushels of wheat at $16.00 per bushel. However, the manufacturer does not use any barley in its products, and currently needs 20,000 bushels of wheat. If the current market price of barley is $3.80 per bushel and that of wheat is $15.80 per bushel, should this opportunity be taken, and why? A) Because the company has no need of barley, the opportunity should not be taken. B) Because the opportunity does not meet the company's need for wheat, the opportunity should not be taken. C) Because the value of the opportunity is positive, the opportunity should be taken. D) Because the value of the opportunity is negative, the opportunity should not be taken.

Suppose pizzerias and sushi bars experience roughly the same economies of scale, with a common minimum market size of 200,000 meals per year. The per- capita demand for pizza is 20 meals per year and the per-capita demand for sushi is 4 meals per year. Suppose you move from a city with a population of 20,000 to a city with a population of 60,000. a. The number of pizzerias will change from [_____] to [_____] b. The number of sushi restaurants will change from [_____] to [_____] Illustrate the initial conditions for both pizzerias and sushi bar in a graph

Eric and Ginny are farmers. Each one owns a 12-acre plot of land. The following table shows the amount of barley and alfalfa each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing barley or alfalfa or to produce barley on some of the land and alfalfa on the rest.   Barley Alfalfa (Bushels per acre) (Bushels per acre) Eric 40 8 Ginny 28 7     ? has an absolute advantage in the production of barley, and    has an absolute advantage in the production of alfalfa.   Eric's opportunity cost of producing 1 bushel of alfalfa is ?   bushels of barley, whereas Ginny's opportunity cost of producing 1 bushel of alfalfa is ? bushels of barley. Because Eric has a   ? opportunity cost of producing alfalfa than Ginny,    ? has a comparative advantage in the production of alfalfa, and  ?   has a comparative advantage in the production of barley.

Eric and Ginny are farmers. Each one owns a 20-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa or barley or to produce alfalfa on some of the land and barley on the rest. Alfalfa Barley (Bushels per acre) (Bushels per acre) Eric 20 4 Ginny 28 On the following graph, use the blue line (circle symbol) to plot Eric's production possibilities frontier (PPF), and use the purple line (diamond symbol) to plot Ginny's PPF. 200 180 Eric's PPF 160 140 120 Ginny's PPF 100 80 60 40 BARLEY (Bushels)

Specify and explain the typical shapes of marginal-benefifit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product? If current output is such that marginal cost exceeds marginal benefifit, should more or fewer resources be allocated to this product? Explain.

Assume that you are in the business of building houses in United Kingdom. You have analyzedthe market carefully, and you know that at a price of £120,000, you will sell 800 houses peryear. In addition, you know that at any price above £120,000, no one will buy your housesbecause the government provides equal-quality houses to anyone who wants one at £120,000.You also know that for every £20,000 you lower your price, you will be able to sell an additional200 units. For example, at a price of £100,000, you can sell 1,000 houses; at a price of £80,000,you can sell 1,200 houses; and so on.a. Sketch the demand curve that your firm faces.b. Sketch the effective marginal revenue curve that your firm faces.c. If the marginal cost of building a house is £100,000, how many will you build and whatprice will you charge? What if MC = £85,000?

Eleanor and her little brother Josh are responsible for two chores on their family's farm, gathering eggs and collecting milk. Eleanor can gather 18 dozen eggs or collect 6 gallons of milk per week. Josh can gather 2 dozen eggs or collect 2 gallons of milk per week. a. The family wants 2 gallons of milk per week and as many eggs as the siblings can gather. Currently, they collect one gallon of milk each and as many eggs as they can. How many dozens of eggs does the family have per week? (Click to select) ✓ dozen eggs. b. If the siblings were to specialized, which should collect the milk? (Click to select) c. If the siblings were to specialize, how many dozens of eggs would the family have per week? (Click to select) dozen eggs.

Felix and Janet are farmers. Each one owns a 16-acre plot of land. The following table shows the amount of alfalfa and barley each farmer can produce per year on a given acre. Each farmer chooses whether to devote all acres to producing alfalfa or barley or to produce alfalfa on some of the land and barley on the rest. Alfalfa Barley (Bushels per acre) (Bushels per acre) Felix 28 7 Janet 18

If 10 million toy cars are sold. which means that: The production of toy cars is currently at an inefficient level, and to reach efficiency more should be produced. From the data given it is impossible to tell if toy cars are being produced at the efficient level. O The production of toy cars is currently at an inefficient level, and to reach efficiency less should be produced. The production of toy cars is currently at the efficient level. IF 30 million toy cars are sold, - vwhich means that: The production of toy cars is currently at an inefficient level, and to reach efficiency more should be produced. O From the data given it is impossible to tell if toy cars are being produced at the efficient level. The production of toy cars is currently at the efficient level. The production of toy cars is currently at an inefficient level, and to reach efficiency less should be produced. The optimal allocation of resources would result in the production of toy cars.