ps002-1

# ps002-1 - Howmuchdoesspecializationmatter?

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1 How much does specialization matter? In this exercise, we would like students to think about  the conditions under which specialization can benefit  the economy a lot.   Here is what I expect you to do: 1. Modify the numbers and rework the example. 2. Modify the context.  That is, create a new example  of your own, similar to the clutch and pins example.      All students must do (1).  Motivated students can  do (2).

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2 Example 2.10 . How much does specialization matter? (I) George and Tom are mechanics.  Tom can replace 30 hammers per day or 15 sets of pins, i.e., the  opportunity cost of replacing a pin is 2 hammers;   George can replace 15 hammers per day or 30 sets of pins, i.e.,  the opportunity cost of replacing a pin is 0.5 hammers. At their garage, the number of hammers made each day is the  same as the number of pins made.  How much more can they accomplish if they specialize than if  each make an equal number of pins and hammers ?
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## This note was uploaded on 09/06/2010 for the course FBE ECON1001 taught by Professor Dr.demurger during the Fall '08 term at HKU.

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ps002-1 - Howmuchdoesspecializationmatter?

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