Assume you are studying the demand curve for “Acer” computers in Kuwait. Show graphically the effect of the following events on this demand curve:

Homework one is represent of 5 % from overall grade, please answer the following question and uploaded through the LMS, hard copy will not accepted only via LMS.

  1. Suppose Kyle and Arie both can work 16 hours a day. Each can allocate these hours to   

  cut Wood (Logs) and/or collect Food (Bushels) in the following way:

                     Kyle                                                                                  Arie

Wood (Logs)      Food (Bushels)                                       Wood (Logs)        Food (Bushels)

    300                              0                                                            120                                     0

    150                          150                                                           100                          40

   100                           200                                                            80                           80

     0                             300                                                            0                            240

  1. Plot the PPF for each in a separate graph (Wood on vertical axis)
  2. Calculate the opportunity cost for each one.
  3. Which one of them has an absolute advantage in wood? Explain.
  4. Which one of them has an absolute advantage in food? Explain.
  5. Which one of them has a comparative advantage in wood? Explain.
  6. Which one of them has a comparative advantage in food? Explain.
  7. If both will only specialize in producing one product only, which will produce what? And what will be the total production of both products?
  • Assume you are studying the demand curve for “Acer” computers in Kuwait. Show graphically the effect of the following events on this demand curve:
  1. Income of Kuwaiti citizens increases, and this product is to be considered Inferior good.
  2.  Kuwaiti citizens heard in news that Acer’s computers have high standards are the best among Computers in the industry.
  3.  Prices of other Computers like DELL and HP decrease with the huge sale campaign these companies are adopting.
  4. Kuwaitis are expecting Acer computers Company to charge higher prices in the coming three months
  5. Acer computer Company announces an increase in their all brand of their computers’ prices today
  6. Kuwait Government announces today an increase in taxes of IT computers prices of almost 110%
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