Economics 251 Dr. HartmannSalsa Ads Salsa AdsEconomics 251 Dr. HartmannFall 2011 Worksheet 1Due Date: TBA Please turn in your answers into my mailbox in OEC 436 or under my office door (OEC 402) by 6 p.m. on the day it is due. See syllabus for how I grade homework assignments.1. (Chp. 2) Tina and Julia are partners in two businesses: salsa production and computer-designed advertisements. The table below shows what each of them can do in a one week. For example, Tina can produce 50 jars of salsa if she spends her entire week working solely on making salsa or 10 ads in one week if she spends her time only making advertisements.Tina JuliaSalsa Ads Salsa Ads50 0 50 0 0 10 0 5a. What is Tina’s opportunity cost of making one jar of salsa? Julia’s OC? Show work.b. What is Tina’s opportunity cost of making one advertisement? Julia’s OC? Show work.c. What task(s) would you assign each of them? Explain why. d. Suppose that Julia takes a class on computer aided designs and now can produce 20 ads in one week. All other aspects of the problem do not change. How do you assign the tasks and why.2. Application: (Chp. 2) The following paragraph summarizes Peter Fritsch’s Wall Street Article “Shrimp Industry Thrives in Vietnam, Trade Fight Looms” published on October 26, 2004, page A1.The article reports on the trade dispute between the U.S. and Vietnam over the Vietnamese shrimp exports to the U.S. In the U.S., shrimpers continue to catch shrimp the old-fashioned, expensive way. Due to environmental regulations and expensive beachfront property, they trawl the open seas. In Vietnam as well as South American and the rest of Asia, shrimp farmers exploit their comparative advantage. Exploiting their natural advantages in climate, cheap labor and large coastal tracts, they farm their catch in ponds. Their methods have lead to surge in the world supply of shrimp and a dramatic decline in shrimp prices. The net result: American shrimp fishermen are struggling, but American consumers benefit from the lower prices. a. Identify the sources for why Vietnam has a comparative advantage in the production of shrimp. (Use the definition of comparative advantage in your answer.)b. Suppose the U.S. government places tariffs on shrimp that is imported. Identify which Americans will benefit and which ones will be hurt from imposing this tariff. Explain your assertions.Optional: if you want to read the entire article, you can download it from the class webpage.3. Application: (Chp. 2) Every economic system must determine what goods and services will be produced, what prices will be charged for these goods and services, and how one allocates resources to produce these goods and services. To test your understanding of different economic systems, match the economic system (capitalism, or communism) with the proper description. (Yes, this question is based on the “cow” joke you may have read..)a. ______________ You have two cows. Give both cows to the government, and the government may give you some milk. b. ______________ You have two cows. Sell one and buy a bull.4. (Chp. 4) How do the following scenarios affect the price and quantity sold of oil on the world market? Use basic demand and supply analysis. Label all graphs, axes, & shifts.a) Tax credits were offered for expenditures on home insulation.b) The Alaskan oil pipeline was completed.c) The ceiling on the price of oil was removed. Assume the ceiling is set below equilibrium levels.d) Oil was discovered in the North Sea.e) Sport utility vehicles and minivans became popular.5. Application (Chp. 4): Find an article that contains a supply and demand story. You may take this article from local newspapers, The New York Times, The Wall Street Journal, or The Economist. Graph the scenario described in the article and explain how the movements in prices and quantities in your graph correspond withthose described in the article. Attach article to your homework.Make sure you give enough background information on the article so that I can follow your analysis. This should be at minimum 2-3 sentences. If your fellow classmate cannot follow your explanation without reading the article, then you need to rewrite it. Also be careful to distinguish between change in quantity demanded (quantity supplied) and change in demand (supply). This will give you practice expressing in wordsyour understanding of demand and supply issues prior to the exam.6. (Chp. 1) You may have seen this recent newspaper headline “Using Facebook ‘can lower exam results by up to 20%’.” A psychologist Paul Kirschnera studied 216 college students who were between 19 and 54 years old atone American university. He found that the average GPA for Facebook users was 3.06 versus 3.82 for nonFacebook users. So, the author concludes that Facebook use distracts students and can lower grades by 20% ([3.82-3.02]/3.82]) on average. Based on lecture, identify one thing you should be cautious about when interpreting Kirschnera’s results. Aside: For your own personal enjoyment, you can similarly evaluate the undergraduate senior thesis on Facebook by Soraya Mehdizade. (You can google her study.) She found that the “more extreme the narcissism, the more time [the student] spent checking Facebook” and the “more extreme the self-loathing, the more time [a student] spent checking Facebook.”Optional: (Do not turn in for credit.) See me in office hours or after class if you have any questions on these problems.- You should be able to answer end of chapter questions in chapter 4of McEachern.- See your analysis for question #2. Now examine whether prohibiting outsourcing of U.S. jobs abroad increases or decreases the efficiency of the U.S. economy.- When traveling through Nicaragua this past summer, I learned if you want to purchase pottery, you should visit San Juan De Oriente. If you want to purchase flowers, visit Katarta, but if you want to bring back a hammock, you should drive to Tipitapa City. Why I was not surprised to hear that each city specializes in production of one item? Explain using macroeconomic concepts. (2-3 sentences)- On a Previous Exam: Croatia declared its independence from Yugoslavia in 1991. After 4 years of war and 10years of rebuilding, Croatia is now the “hot spot” for many Europeans to buy land for summer vacation homes.The Adriatic Sea is quite