Economics 304k mt1 fall 2011 pastel

Economics 304k mt1 fall 2011 pastel - Economics...

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Economics 304k-Professor Sibley Midterm Exam 1-Pastel Version October 5, 2011 Directions 1. Do not open the exam until told to do so. 2. Show all work on the exam. You will not need any paper other than the exam. 3. There are six questions, of which you must answer five. Answer ONLY five. If you answer six, we will just grade the first five. 4. Notwithstanding the above, you MUST answer question 5. 5. Each question will be worth 20 points.
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Pat and Mike work together in a small business that makes towels and boxes. Pat can make either 20 boxes or 20 towels in 1 hour. Mike can make 15 towels or 30 boxes in 1 hour. Each works 20 hours per week. a. For Pat and Mike, what is the opportunity cost of a towel? Pat ______________ Mike_____________ b. For Pat and Mike, what is the opportunity cost of a box? Pat___________ Mike_________ c. Who has a comparative advantage in boxes? In towels? Boxes: ________ Towels:________ d. Suppose that each works 10 hours on boxes and 10 hours on towels. Does this reflect their respective comparative advantages? Why, or why not? 2
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This note was uploaded on 12/15/2011 for the course ECON 304K taught by Professor Ledyard during the Fall '08 term at University of Texas.

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Economics 304k mt1 fall 2011 pastel - Economics...

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