Homework 1 - Justin Ng 73374903 10/8/2010 Econ 13 Haelim...

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Justin Ng 73374903 10/8/2010 Econ 13 Haelim Park HW 1 Global Economy, Econ 13/IS 13 Due in class on Friday, October 8 th (Please make sure to write your TA name on your homework) 1. Ben decides to spend three hours working overtime on Friday evening rather than going to the bar with his friends. He earns $10 an hour. What is Ben’s opportunity cost of working overtime in this situation? (5 points) Because Ben chooses to work overtime on Friday evening rather than going to the bar, his opportunity cost in this situation is the enjoyment of the occasion he loses had he gone instead of working. The opportunity cost for Ben is what he gives up in order to work the three additional hours. 2. Angelina can fix a meal in 1 hour, and her opportunity cost of one hour is $50. Brad can fix the same kind of meal in 2 hours, and his opportunity cost of one hour is $20. Will both Angelina and Brad be better off if Brad fixes meals for her and she pays him $45 per meal? Explain. (15 points) Both Angelina and Brad will be better off if Brad fixes the meal, as both will be better off by $5. For Angelina to fix her own meal, her opportunity cost would be $50, $10 more than it would
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