econ2 - Micro Econ Problem Set 2 1. A. For Bill, the...

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Micro Econ Problem Set 2 1. A. For Bill, the opportunity cost of teaching would be 2 units of research and the opportunity cost of research would be ½ units of teaching. For Ted, the opportunity cost of teaching would be 5/3 units of research and opportunity cost of research would be 3/5 units of teaching. b. If Bill did 3 units of teaching, he would get 2 units of research. If Ted did 3 units of teaching, he would get 5 units of research. The total amount of research is 7 units. c. If they specialized, and Ted had 6 units of teaching, Bill would have the full 8 units of research and the gain from trade is 1 extra unit of research. 2. If Florida grew both crops, they couldn’t produce the maximum amount of either crop. Though they are better at producing both, by trading with Minnesota, they gain from specializing in oranges and Minnesota specializes in corn. If they trade, both benefit from the specialized production. 3. a. Florida: opportunity cost of corn= 2 oranges; opportunity cost
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This note was uploaded on 09/30/2009 for the course ECON 211 taught by Professor Johnson during the Fall '07 term at Clemson.

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econ2 - Micro Econ Problem Set 2 1. A. For Bill, the...

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