1.	Give the slope and the y intercept of the following lines:
a.	y=2x+1
	
	This is standard y=mx+b format.  Read the answers off: the slope is 2, the y intercept is 1.

b.	x-1=y
	
	Just rearranged:  slope is 1, y intercept is -1.

c.	3y+2=5x

	Divide by 3 to get y=5x/3 - 2/3.  Now it’s standard.  Slope is 5/3, y intercept is -2/3.

d.	y=x

	Easy.  This is the 45 degree line, slope is 1, y intercept is 0.

2.	Use the figure above to answer the following questions:
a.	If D1 is described by the equation y=5-2x, then what is the x-intercept of D1?  Which point (A, B, or C) is it?

		If y=0, then x=5/2=2.5   This corresponds to point B on the graph.

b.	If S2 has a slope of 1, then what is the equation specifying S2?
 
	If the slope is 1, then the equation is y=x+4.  (Note you have to see the intercept is 4)

c.	If S1 has a slope of 2, then what is point A? (D1 is still as in part (a), also for the answer give the x and y coordinate.)

	First find the equation of S1.  It is y=2x+1.  Then write 5-2x=2x+1 and solve for x.  x=1.

3.	Countries Beta and Zeta each have 10 factories and can produce only sweaters or scarves.  Output per factory is indicated in the following table:

	Sweaters	Scarves	
Beta	10	100	
Zeta	5	50	

a.	On separate graphs, graph the PPF for Beta and Zeta.  Assume the PPF for both countries is linear with constant slopes.  Also assume sweaters are the x variable and scarves are the y-variable.

b.	What is the opportunity cost of a scarf in Beta?  In Zeta?
c.	What is the opportunity cost of a sweater in Beta?  In Zeta?
	
	For (b) and (c), draw a table:

Opportunity cost of a:	In Beta:	In Zeta:	
Sweater	10 scarves	10 scarves	
Scarf	1/10 sweater	1/10 sweater	

4.	You are given the following set of information. Find the slope and y-intercept, and the equation for each set of information.
a.	(x,y) = (0,0) and (1,3) Slope is 3, y intercept is 0, equation is y=3x.
b.	(x,y) = (-4,1) and (5,3) Slope is 2/9, y intercept is 17/9, and equation is y=2x/9 + 17/9. 
c.	(x,y)=(3,2) and (4,2)  Slope is 0, y intercept is 2, and equation is y=2.

5.	Suppose Sam is awake 16 hrs/day, and can work a maximum of 40hrs/week at his full time job (8 hrs a day).  This job pays him $10/hr.  Sam wants to buy a used car that costs $1800.  
a.	If Sam starts out with no money, how many weeks will he have to work before he can buy the car (assume he will buy the car at the end of the week)?
	
	40hrs/wk*$10/hr = $400/wk in income.  He’ll have to work 5 weeks, as 4 weeks would only be 1600 and 5 is 	enough (he’ll have money leftover)
  
b.	Suppose Sam sees an ad soliciting some part time help for a mere $4/hr.  If Sam works this job as well for 20hrs/week, then when can he buy the car?
	
	$4/hr*20hrs/wk = $80/wk extra, $400+$80=$480 a week, he’ll only have to work 4 weeks.

c.	Suppose again Sam has no money.  Sam must also spend at least 50 hours a week taking care of his kids.  What is the fastest (in number of days, now) that Sam can have enough money to buy the car?

	Short answer: 24.

	First, note Sam is still going to have to work at least 3 weeks before he is even close to buying the car.  He has 16*7=112 hours each week that he is awake, and then works 40 of those in his main job and takes care of the kids for 50 hours, so he then has 112-50-40=22 hours remaining.  He can work part-time for $4/hr for 22 hours a week (no leisure time), so Sam can make a maximum of $488 a week for the first three weeks.  After three weeks he will have $488*3=$1464.
	Now, the fourth week shows this is partially a trick question.  Sam has to deal with the kids 50 hours a week, but there is no indication WHEN in the week this must be done.  In this fourth week, if he deals with the kids later in the week he can make more money sooner. Recognizing that, start by finding how much Sam can work part time each day.  He has 8 free hours each day if you ignore the kids for the first few days of the week.  That’s an extra $32/day at the part time job.  Remember Sam makes $80 a day at his main job, so combining the main job and the part time work he can make $112 a day.  Sam has $1464 from the first three weeks, and needs $1800.  $1800-$1464=$336.  So, by ignoring the kids and working every hour he is awake the first three days of this 4th week, Sam makes $112 per day totaling $336 for three days.  That combined with his $1464 from weeks 1-3 totals $1800, just enough to buy the car.  
	The question asks what is the fewest number of DAYS, and this will by 3 weeks and 3 days, or 24 days.  The short answer is 24 days.
 
6.	Is the following statement positive or normative?  
	
		“There were more A’s in microeconomics last semester than D’s.”

	If it’s positive, modify it slightly so that it becomes a normative statement.  If it is normative, 	modify it slightly so that it becomes a positive statement.

		This is a positive statement.  A normative one would be something like “There were not enough A’s in 			microeconomics last semester, and too many D’s.”

7.	(Harder)  Consider the following figure.  Assume the equation for D1 is y=5-2x.  What would the slope of S1 have to be for point A to have a y-coordinate of 4?

	This question requires some algebra skills.  There may be several ways to do it as well.  Here is one:

We want to know what slope the line S1 must have for A to have a y-coordinate of 4.  First, write the equation for S1 assuming we don’t know the slope:
	
	y=mx+1

We know point A has the same x and y coordinates in S1 and in D1 (the lines intersect there), so we can write:

	mx+1=5-2x

and solve for x, which gives

	mx+2x=4,

or

	x(m+2)=4,

finally:   x= 4/(m+2)

Plug this into the equation for D1:  y=5-2*(4/(m+2))

We want y=4:   4=5-2*(4/(m+2))

Solve for m:  2(4/(m+2))=1,

Or  1/(m+2) = 1/8,

Or   8 = m+2

So m=6.

The slope of S1 must be 6 for the y coordinate at A to have y=4.