Tutorial Solutions Week 2 S1 2018.docx

Tutorial Solutions Week 2 S1 2018.docx - Tutorial solutions...

Info icon This preview shows pages 1–3. Sign up to view the full content.

ECF1100 MICROECONOMICS SEMESTER 1 2017 Tutorial solutions WEEK 2: Introduction to economics Written answers to problems 1 and 2 of chapter 1 + problems 4 and 5 of chapter 2 + problem 5 of chapter 3. Extra question: If trade is good thing then why are some countries actually worse off as a result of free trade? Chapter 1 (problems 1 and 2) Q1 a. A family deciding whether to buy a new car faces a trade-off between the benefit of the car and other things they might want to buy. For example, buying the car might mean they must give up going on a holiday for the next two years. So the economic cost of the car is the family’s opportunity cost in terms of what they must give up. b. For a politician deciding whether to increase spending on national parks, the trade-off is between parks and other spending items or tax cuts. If more money is spent on national parks, that may mean less spending on national defence or on the police force. Or, instead of spending more money on national parks, taxes could be reduced. For education purposes
Image of page 1

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

c. When a company director decides whether to open a new factory, the decision is based on whether the new factory will increase the firm’s profits compared to other alternatives. For example, the company could upgrade existing equipment or expand existing factories. The bottom line is ‘Which method of expanding production will increase profits the most?’ d. In deciding how much to prepare for a lecture, a professor faces a trade-off between the value of improving the quality of the lecture compared to other things they could do with her time, such as working on additional research.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern