Test 1 With Solutions

# Test 1 With Solutions - Page1of7 McMaster University...

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Page 1 of 7 McMaster University Department of Economics ECON 1B03 Winter 2014 Test 1 VERSION 1 ANSWERS Saturday February 8, 2014 60 minutes Instructor: H Holmes MULTIPLE CHOICE Answer all questions on the scan sheet using HB pencil. Calculators are permitted. Hand in the scan and this sheet separately. TOTAL MC MARKS AVAILABLE: 30 NAME:__________________________________________________________________________ STUDENT #:_____________________________________________________________________

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Page 2 of 7 Scenario 1 The following table reports production information for Canada and the US for certain elite athletes. Assume that coaches are the only inputs needed to produce an elite athlete. No. of Players No. of Coaches to Produce a Player Hockey Players Baseball Players Hockey Players Baseball Players Canada 300 120 10 10 US 180 270 12 13 1. Refer to Scenario 1. What is the opportunity cost of a hockey player in Canada? a. 1.4 baseball players b. 120 baseball players c. 1.5 baseball players d. .4 baseball players 2. Refer to Scenario 1. What is the opportunity cost of a baseball player in the US? 3. Refer to Scenario 1. Which statement is true? 4. Refer to Scenario 1. At what price would Canada possibly “sell” hockey players to the US? 5. Refer to Scenario 1. At what price would Canada possibly “sell” baseball players to the US? a. 1 baseball player = 2.6 hockey players b. 1 baseball player = 1.5 hockey players c. 1 baseball player = .35 hockey players d. Canada would not sell baseball players to the US
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