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Unformatted text preview: Josh Warren 1. A. For each factory the opportunity cost is one lollipop. B. See graph 1 2. A. The opportunity cost for ACME is 2 lollipops, the opportunity cost for BAZOOKA is 1/3 of a lollipop, and the opportunity cost of CHARMS is 1 lollipop. B. See graph 2 C. In question one the 3 factories all had the same opportunity cost so the market production possibilities curve had a uniform slop. In question two on the other hand the three factories have different opportunity costs so the market PPC will be segmented each with a different slope. 3. A. He has the lower opportunity cost since he can make less money in a day than you. B. The Principle of comparative advantage stats that each party should specialize in the activity that they have the smallest opportunity cost in. In this example Chris has a lower opportunity cost then me so he should spend 2 days cleaning the apartment while you work. In addition you would pay him somewhere between $100 and $200 for the time he took off work to clean the apartment. 4. a) The World Trade Organization is an international organization which handles trade disputes and ensures that trade proceeds smoothly between member nations. It sets and enforces trade rules in an attempt to protect the respective rights of its member nations...
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This note was uploaded on 04/08/2008 for the course ECON 160 taught by Professor Michaelvardanyan during the Fall '06 term at Binghamton University.
- Fall '06
- Opportunity Cost