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E202ProblemSet1.2

# E202ProblemSet1.2 - comparative advantage in washing cars 3...

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10. The meal plan at University A lets students eat as much as they like for a fixed fee of \$500 per semester. The average student there eats 250 pounds of food per semester. University B charges \$500 for a book of meal tickets that entitles the student to eat 250 pounds of food per semester. If the student eats more than 250 pounds, he or she pays \$2 for each additional pound; if the student eats less, he or she gets a \$2 per pound refund. If students are rational, at which university will average food consumption be higher? Explain briefly. Chapter 2 2. Ted can wax a car in 20 minutes or wash a car in 60 minutes. Tom can wax a car in 15 minutes or wash a car in 30 minutes. What is each man’s opportunity cost of washing a car? Who has
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Unformatted text preview: comparative advantage in washing cars? 3. Toby can produce 5 gallons of apple cider or 2.5 ounces of feta cheese per hour. Kyle can produce 3 gallons of apple cider or 1.5 ounces of feta cheese per hour. Can Toby and Kyle benefit for specialization and trade? Explain. 4. Nancy and Bill are auto mechanics. Nancy takes 4 hours to replace a clutch and 2 hours to replace a set of brakes. Bill takes 6 hours to replace a clutch and 2 hours to replace a set of brakes. Determine whether anyone has an absolute advantage at either task and, for each task, determine who has a comparative advantage....
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