Eco182A_Spring_2011_Quiz_1_Version_2_Answers

Eco182A_Spring_2011_Quiz_1_Version_2_Answers - UNIVERSITY...

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UNIVERSITY AT BUFFALO DEPARTMENT OF ECONOMICS Economics 182A, Spring 2010 Introduction to Microeconomics Answers to Version Two of Quiz One Question 1: Tabitha has just enough time to do one, and only one, of the following activities; read a book, bathe, paint her nails, and make a phone call. Her personal valuations of these tasks are, respectively; $15, $14, $18 and $20. (i) What is Tabitha’s rationally chosen activity? Answer: Making a phone call. (1 point) (ii) What is Tabitha’s opportunity cost of making a phone call? (1 point) Answer: $18. (iii) Suppose that Tabitha’s personal valuation of bathing increases from $14 to $19. Does this change her opportunity cost of painting her nails? Answer either “Yes” or “No”. Answer: No. (1 point) Question 2. Mickey and Minnie both have straight-line production possibility frontiers. Mickey can produce at most 200 pies or at most 100 pizzas. Minnie can produce at most 40 pies or at most 120 pizzas. (a)
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Eco182A_Spring_2011_Quiz_1_Version_2_Answers - UNIVERSITY...

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