Intermediate Microeconomics: A Modern Approach, Seventh Edition

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Economics 301 – Fall 2006 – PRELIM 1 MAKEUP – J. Wissink – Friday October 6, 2006 Directions: Answer all questions. Write legibly, concisely, and coherently. Be sure to label all axes, functions, and variables you use. READ QUESTIONS CAREFULLY. Draw pictures whenever possible. Show all your work! Total time for the test is 50 minutes. Total points on test = 100 ANSWER ALL THE QUESTIONS. See point scores by each question. 1. (20 pts) Consider a small hotel with three owners/workers: Abe, Betty and Charlie. There are only two jobs to consider: taking reservations and cleaning rooms. The table below shows how many hours it takes for each person to take one reservation and how many hours it takes for each person to clean one room. Assume that each person works a total of 48 hours/week. You may also assume that hours, room cleaning and reservation-asking are all completely divisible. 1 Input Requirements Person Hours for 1 reservation Hours for 1 clean room Abe 1hr. 2hrs. Betty 2hrs. 1hr. Charlie 4hrs. 3hrs. a. What is the marginal opportunity cost for cleaning rooms for each person? b. If there must be exactly 60 rooms cleaned during the week, who should do what? That is to say, how should the work be allocated across Abe, Betty and Charlie? (Assume you want to allocate the work efficiently!) c. If 60 rooms are cleaned efficiently, what is the maximum number of reservation solicitations that the hotel can make and who is doing those? d. Construct a graph of the joint PPF for the “hotel” household. 2.
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This homework help was uploaded on 02/01/2008 for the course ECON 3010 taught by Professor Wissink during the Fall '07 term at Cornell.

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prilim-1B_301_f06 - Economics 301 Fall 2006 PRELIM 1 MAKEUP...

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