1. In one day, Kessy can bake 10 cookies or mix 15 glasses of lemonade. Assume constant opportunity costs. Part 1: Draw a production possibility frontier for Kessy. Label this curve PPF1. Part 2: Plot a point to identify a production combination of cookies and lemonade that is feasible but not efficient. Label this point A. Then identify a production combination that is feasible and efficient. Label this point B. Finally, identify a production combination that is not feasible in production. Label this point C. Part 3: Suppose that Kessy is able to use the waste produced while preparing lemonade to make additional cookies. After Kessy discovers this new technique, she is able to produce twice as many cookies. Draw a new production possibility frontier for Kessy and label this curve PPF2. 2. Draw a diagram for the market for nurses. Label the equilibrium point E1. Identify the equilibrium price and quantity. Part 1: Americans are living longer and, as a result, need more medical care throughout their lives. Show the effect of this demographic change on either the supply of or demand for nurses. Label the new curve D2 or S2. Part 2: Suppose that at the same time as this demographic change occurs, more college students decide to major in nursing. Show the effect of this change on either the supply of or demand for nurses. Label the new curve D2 or S2. Part 3: Assume that both of these changes happen at the same time. Identify the new equilibrium price and quantity in the market after both of these changes. Label this new point E2. Part 4: Is it possible to determine with certainty the directional movement of price or quantity in the market for nurses based on this information?
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