homework_1_solution - Introductory Microeconomics ECON 1110...

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Introductory Microeconomics – ECON 1110 Homework Assignment #1 Suggested Solutions 1. a) (5 points for each PPF, totally 10 points) Toby's PPF 0 5 10 15 20 25 0123456789 1 0 fish apple Candice's PPF 0 0.5 1 1.5 2 2.5 1 0 fish apple b) (2.5 points each, totally 5 points. 1 point each if there is no ‘fish/apple’ behind the number )Toby’s opportunity cost of producing 1fish is 2 apples, and his opportunity cost of producing 1 apple is ½ fish. c) (2.5 points each, totally 5 points. 1 point each if there is no ‘fish/apple’ behind the number ) Candice’s opportunity cost of producing 1 fish is ½ apples, and her opportunity cost of producing 1 apple is 2 fish. d) (2.5 points for each, totally 5 points) Toby has absolute advantage in fish, since he can catch 10 fish per day, and Candice can only catch 4 fish per day. He also has absolute
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advantage in apple, since he can collect 20 apples per day, and Candice can only collect 2 apples per day. e) (2.5 points each, totally 5 points)Candices has comparative advantage in fish, since her opportunity cost of producing 1 fish is less (½ apple < 2 apples). Toby has comparative
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homework_1_solution - Introductory Microeconomics ECON 1110...

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