EC-252: Principles of MicroeconomicsSpring 2020Homework #1Due Date: Wednesday, January 29, 2020Name: _________________________________________________________1. Write down the ten principles of economics.12. The government often applies extra taxes to activities that society deems bad/wrong/inappropriate. These are often termed “sin taxes,” and include the high taxes many communities levy against cigarettes, alcohol, and strip clubs. What is the ultimate goal of sin taxes? To which of the ten principles of economics does this question most closely relate (just provide the number)?Goal ->Principle ->3. Draw a production possibilities frontier for a society that produces video games and television sets. Show an example of an efficient point, inefficient point, and infeasible point on your graph.Be sure to label your axes!24. Sev and Mary have the following valuations for a set of goods:Item Sev’s Valuation Mary’s ValuationBubble gum 5 15Chainsaw 7 1Volvo 40 60Snickers bar 3 2Sev and Mary are given the following baskets of goods: Sev gets 3 bubble gum, 0 chainsaws, 1 Volvo, and 5 Snickers bars. Mary gets 1 bubble gum, 2 chainsaws, 5 Volvos, and 1 Snickers bar.a. What is the total, personal value of Sev’s basket?b. What is the total, personal value of Mary’s basket?c. Propose a trade involving just one item on each side that would make both Sev and Mary better off. Sev trades to Mary ->Mary trades to Sev ->35. The baskets from problem #5 are changed. Instead, Sev receives 4 bubble gum, 1 chainsaw, 1 Volvo, and 0 Snickers bars. Mary gets 1 bubble gum, 0 chainsaws, 2 Volvos, and 1 Snickers bar. a. What is the total, personal value of Sev’s basket?b. What is the total, personal value of Mary’s basket?c. Is this situation Pareto efficient? Circle the correct answer below.YES NOd. If not, what trade should happen to make at least one player better off without hurting the other one (or improve both players)? (Hint: Consider trades more complex than 1 item for 1 item, such as 5 items for 1 item.)6. Machine #1 in the Ford factory can make one steering wheel per hour and one head rest every 15 minutes. Machine #2 in the Ford factory can make one steering wheel every 2 hours and onehead rest every 5 minutes. 4a. How many steering wheels can machine #1 make in one 24-hour workday? b. How many steering wheels can machine #2 make in one 24-hour workday?c. Which machine has the absolute advantage in steering wheels?d. Which machine has the absolute advantage in head rests?e. What is the opportunity cost (OC), in terms of head rests, for machine #1 in making one steering wheel?f. What is the OC, in terms of head rests, for machine #2 in making one steering wheel?g. Which machine has the comparative advantage in making steering wheels?57. John works at McDonald’s. He can spend his time there preparing burgers or chicken sandwiches. In one hour, if he spends all of his time and resources making burgers, he can make64 burgers. In one hour, if he spends all of his time and resources making chicken sandwiches, he can make 16 chicken sandwiches. Obviously he is also allowed to split his time during that hour making either burgers or chicken sandwiches. Show John’s PPF below. Remember to labelthe axes and endpoints. Also label the midpoint, where John spends 30 minutes making burgersand 30 minutes making chicken sandwiches. Labeling a point means listing its x- and y-coordinates.8. In problem #7, what is John’s OC of making 4 chicken sandwiches?69. Draw the societal PPF for pens and paper that would combine the productions of Darrin, Henry, Frank, and Tracy. The table below shows their individual productions of each good separately, assuming they spent all their time producing just that one good. Be sure to label your axes, eachsegment of the societal PPF (by attaching a name to it), endpoints, and all middle points where the slope changes (i.e., where a “kink” in the graph occurs). I suggest you use Excel for this, or at least graph paper. If you draw it by hand, please demonstrate a minimal artistic ability that atleast includes drawing straight lines and marking off intervals on your graphs evenly.Darrin Henry Frank TracyPens 10 6 5 3Paper 4 12 1 15Please circle the correct answer for the multiple choice questions that follow.71. Economic scarcity arises from:a. Inefficient productionb. Explorationc. Limited wants and limitless resourcesd. Limited resources and limitless wants2. Economic scarcity is experienced by:a. Only the poorb. Only the wealthyc. Only producersd. Everyone in society3. Economics is:a. A physical scienceb. A social science4. Factors of production include all of the following EXCEPT:a. Laborb. Landc. Capitald. Human capitale. None of the above answers are correct because all of the above are factors of production5. Which of the following statements is/are correct?I. The “alternative thing given up to get something else” is a good definition of opportunity costII. Wealthy economies like the U.S. do not face tradeoffsIII. Scarcity creates opportunity costsIV. None of our ten principles address opportunity costa. Statement I onlyb. Statements II and IV onlyc. Statements I and III onlyd. Statements I, II, and III onlye. All of the above statements are correct86. You have the choice of going to Disney World for the week, going skiing for the week, or working at your job for the week. The opportunity cost of going to Disney World is:a. The combined value of working and skiingb. Zeroc. The value of working or skiing, depending on which you would have chosen instead of Disney Worldd. The amount of money you spend on soda while at Disney World7. Which of the following statements apply to economic models?I. An economic model makes assumptionsII. An economic model is simpler than the reality it explainsIII. The production possibilities frontier is one example of an economic modela. Statement I onlyb. Statements II and III onlyc. All of the above statements are correct8. Which of the following is NOT illustrated by a PPF?a. Scarcityb. Who gets the goods producedc. Opportunity costd. Necessity of making tradeoffs9. A country that must decrease production of one good in order to increase the production of another a. Must be using resources inefficientlyb. Must be using resources efficientlyc. Must be producing inside its PPFd. Must be producing outside its PPF10. Suppose a country, when operating on its PPF, can produce 25 tons of corn and