Solution-1

Solution-1 - Murat Kilinc EC-205 FUNDAMENTALS of ECONOMICS...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Murat Kilinc EC-205 FUNDAMENTALS of ECONOMICS Fall-2005 Problem Set 1: 1) How are the economic concepts of “Scarcity” and “Opportunity Cost” related? Answer: Scarcity is the source of opportunity cost. Without scarcity there would be no opportunity cost. 2) For each of the following state the(or an) opportunity cost: a) Leisure (free time) b) Working in ones own business c) Going to graduate school Answer: a) The wage rate is the opportunity cost of leisure b) The forgone salary is the opportunity cost of working in ones own business. c) Forgone income from working as a college graduate is the opportunity cost of going to graduate school. 3) How is the concept of “Comparative Advantage” different from “Absolute Advantage”? Answer: Comparative advantage looks at differences in opportunity costs whereas Absolute advantage looks at whether a country can produce goods more productively (efficiently). 4) State three conditions, on the Production Possibility Frontier, under which a Country A will have
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/28/2008 for the course EC 205 taught by Professor Hymen during the Fall '08 term at N.C. State.

Page1 / 3

Solution-1 - Murat Kilinc EC-205 FUNDAMENTALS of ECONOMICS...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online