## Write your answers directly into the space provided.

Refer to the figure on page 4. First we look at the blue curve.

– At the point labeled A on the blue curve, how many cars are being produced?

## Answer: _100_________________________________

– At the point labeled A on the blue curve, how many computers are being produced?

## Answer: __0_________________________________

– At the point labeled B on the blue curve, how many cars are being produced?

## Answer: __50_________________________________

– At the point labeled B on the blue curve, how many computers are being produced?

## Answer: __80_________________________________

– If the economy moves from point A to point B on the blue curve, how much is the reduction in the number of cars being produced?

## Answer: __50_________________________________

– If the economy moves from point A to point B on the blue curve, how much is the increase in the number of computers being produced?

## Answer: __80_________________________________

– If the economy moves from point A to point B on the blue curve, how much is the increase in the number of computers for each car given up? (Calculate it as the increase in computers from question 6 divided by the decrease in cars from question 5.) This number is called to return (that is, benefits) from giving up one car.

## Answer: __1.6________________________________

– At the point labeled C on the blue curve, how many cars are being produced?

## Answer: __0__________________________________

– At the point labeled C on the blue curve, how many computers are being produced?

## Answer: __90_________________________________

– If the economy moves from point B to point C on the blue curve, how much is the reduction in the number of cars being produced?

## Answer: __50_________________________________

– If the economy moves from point B to point C on the blue curve, how much is the increase in the number of computers being produced?

## Answer: __10_________________________________

– If the economy moves from point B to point C on the blue curve, how much is the increase in the number of computers for each car given up? (Calculate it as the increase in computers from question 11 divided by the decrease in cars from question 10.) This number is called to return (that is, benefits) from giving up one car.

## Answer: __INCREASING RETURN___________________________________

– Compare your answers to question 7 to question 12. Does the blue curve exhibit increasing return or decreasing return?

## Answer: __DECREASING RETURN___________________________________

– At the point labeled A on the red curve, how many cars are being produced? (This is a repeat of question 1.)

## Answer: __100_________________________________

– At the point labeled A on the red curve, how many computers are being produced?

## Answer: ___0___________________________________

– At the point labeled D on the red curve, how many cars are being produced?

## Answer: ___50_________________________________

– At the point labeled D on the red curve, how many computers are being produced?

## Answer: ___10________________________________

– If the economy moves from point A to point D on the red curve, how much is the reduction in the number of cars being produced?

## Answer: ____50_________________________________

– If the economy moves from point A to point D on the red curve, how much is the increase in the number of computers being produced?

## Answer: ____10_________________________________

– If the economy moves from point A to point D on the red curve, how much is the increase in the number of computers for each car given up? (Calculate it as the increase in computers from question 19 divided by the decrease in cars from question 18.) This number is called to return (that is, benefits) from giving up one car.

## Answer: ____0.2_________________________________

– At the point labeled C on the red curve, how many cars are being produced? (This is a repeat of question 8.)

## Answer: _____0________________________________

– At the point labeled C on the red curve, how many computers are being produced?

## Answer: _____90________________________________

– If the economy moves from point D to point C on the red curve, how much is the reduction in the number of cars being produced?

## Answer: _____50________________________________

– If the economy moves from point D to point C on the red curve, how much is the increase in the number of computers being produced?

## Answer: _____40________________________________

– If the economy moves from point D to point C on the red curve, how much is the increase in the number of computers for each car given up? (Calculate it as the increase in computers from question 24 divided by the decrease in cars from question 23.) This number is called to return (that is, benefits) from giving up one car.

## Answer: ____0.8_________________________________

– Compare your answers to question 20 to question 25. Does the red curve exhibit increasing return or decreasing return?

Answer: _____INCREASING RETURN______________