HOMEWORK 1 Answers

HOMEWORK 1 Answers - HOMEWORK 1. ANSWERS. 1. It varies. 2....

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HOMEWORK 1. ANSWERS. 1. It varies. 2. The opportunity cost of going to grad school mainly refers to the forgone wages that the student could have obtained with his/her bachelor degree. For instance, assume that with a bachelor degree a person could obtain a wage of $40,000/year. If the person goes to school for a full time 2-year MBA program (and the person does not work in the meantime) the forgone wages would amount to $80,000. Enrolment in grad school is likely to increase because workers will be laid off or they will face the chance of being laid off. In either case, school becomes a less costly decision in terms of its opportunity cost component, even if the direct costs of schooling do not change (i.e. the tuition costs remain constant). 3. It varies. 4. Assume the following production possibility frontier for the economy of Macondo (an imaginary place created by Gabriel García Márquez): Pianolas 60 D 40 C 20 B A Gold Fish 1400 2000 1800 a. What is the opportunity cost of producing the first 20 pianolas?
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This note was uploaded on 04/08/2008 for the course ECON 120 taught by Professor Serpa during the Spring '08 term at Ill. Chicago.

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HOMEWORK 1 Answers - HOMEWORK 1. ANSWERS. 1. It varies. 2....

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