Answer the following questions:

1.                  Lawns produce no crops but occupy more land (25 million acres) in the United States than any single crop, such as corn. This means that the United States is operating inefficiently and hence is at a point inside the production possibility curve. Right? If not, what does it mean?

2.            Suppose the United States and Japan have the following production possibility tables:

a.             In what good does the United States have a comparative advantage?

b.            Is there a possible trade that benefits both countries?

3.      Write the definition for each of the following:

a.       Law of Demand

b.      Law of Supply

4.      Which of the attached graphs best demonstrates the law of demand?

1. I
2. II
3. III
4. IV

5.      Which of the attached graphs best demonstrates the law of supply?

1. I
2. II
3. III
4. IV