1
METU
Department of Economics
ECON 122
Erkan ERD
Đ
L
20072008 Spring
PROBLEM SET # 1
(Chapter 13)
1
. Graph the functions
(1) y = 8 + 3x (2) y = 8 – 3x (3) y = 8  6x
(4) P=8+3Q
(5) Q=102P
a. Find the slopes and intercepts of the functions above.
b. Explain the relationship between the dependent and the independent variables x and
y for each equation.
2
. The following table shows output per hour for Martha and Stewart who make gift
baskets and potholders:
Output per Hour
Martha
Stewart
Gift Baskets
10
8
Potholders
20
12
a) What is the opportunity cost of a gift basket for Martha? What is the opportunity
cost of a gift basket for Stewart? Who has a comparative advantage in producing gift
baskets? How can you tell?
b) What is the opportunity cost of a potholder for Martha? What is the opportunity
cost of a potholder for Stewart? Who has an absolute advantage in producing
potholders? Who has a comparative advantage in producing potholders?
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 Spring '08
 erkanerdil
 Economics, Opportunity Cost, Supply And Demand, #

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