Midterm1ReviewQs

Midterm1ReviewQs - Review for Midterm 1: Fall 2010 I....

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

View Full Document Right Arrow Icon
Review for Midterm 1: Fall 2010 I. Opportunity Cost: You won a free ticket to see an Eric Clapton concert (which has no resale value). Bob Dylan is performing on the same night and is your next-best alternative activity. Tickets to see Dylan cost $40. On any given day, you would be willing to pay up to $50 to see Dylan. Assume there are no other costs of seeing either performer. Based on this information, what is the opportunity cost of seeing Eric Clapton? a. $0 b. $10 c. $40 d. $50 Adam entered a raffle and won a ticket to a Phillies playoff game. Unfortunately, the game is scheduled for the same evening as Penn Soccer Teams game. Adam can see the Soccer team for free and values it at $25. The resale value of the Philly ticket is $25 and he values that game at $40. What is the opportunity cost of going to the Philly’s game? a. $90 b. $65 c. $50 d. $25 Consider the daily production table below of yams and sweet potatoes. Suppose that the joint economy of Barry and Gary is producing 10 yams and 10 sweet potatoes. What is the opportunity cost of yams?
Background image of page 1

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

View Full DocumentRight Arrow Icon
Yams Sweet Potatoes Barry 12 4 Gary 5 10 a. 0 b. 1/3 c. 1/2 d. 2 Hi Professor Stein, I have a question about absolute advantage. I am going to create an example to facilitate asking my question. Spain can produce 20 computers per worker per day, and the United States can produce 30 computers per worker per day. Spain has 4 works and the United States has 2. Who then has the absolute advantage? Does Spain because with the addition workers, Spain producers 80 computers while the United States only produces 60? Thanks in advance, Consider the daily production table below of yams and sweet potatoes. Suppose that the joint economy of Barry and Gary is producing 10 yams and 10 sweet potatoes. What is the opportunity cost of yams? Barry: 12 yams, 4 sweet potatoes Gary: 5 yams, 10 sweet potatoes Answer: 0 (I do not understand why this is 0? Is it because at 10 yams and 10 sweet potatoes, they are producing inside the ppf and are not wholly efficient?) 2. Consider a world in which producers divide their time between making hamburgers and pizzas. Furthermore, assume that the people who buy hamburgers are completely different from the people who buy pizza. Now suppose the demand for pizzas increases dramatically because people learn that pizza is great for their health. What happens to the supply and demand curves of hamburgers? a. Neither changes, because the two markets have nothing to do with each other b. The supply curve stays the same, and the demand curve shifts c. The supply curve shifts, and the demand curve stays the same d. Both curves shift (the answer for this question wasn't included. I'm assuming in the short term, the demand curve for hamburgers will shift in because it is now a less-desirable substitute to pizza, which would make the answer B. Is this correct?) If it’s true that Susie has a comparative advantage in the production of hats, who will produce hats?
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 8

Midterm1ReviewQs - Review for Midterm 1: Fall 2010 I....

This preview shows document pages 1 - 3. Sign up to view the full document.

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