Econ 201 Principles of Macroeconomics
Dr. Phillip Miller
Practice Questions for Exam 1
1. Mike is thinking about going camping at Blue Mounds State Park this weekend.
Earlier in the year he bought a pass for $20 that allows him into any state park in
Minnesota for the year. He regularly visits state parks in Minnesota, so his
decision to buy the pass was not dependent on making this particular trip. Mike
will burn approximately 10 gallons of gas to make the trip (round-trip) to the
campsite. Assume gas costs $1.50 per gallon. Mike usually works a 4 hour day
on Saturday, but he will be gone the entire weekend if he goes camping. Mike
gets paid $15.00 for each hour he works. What is Mike’s opportunity cost of this
camping trip? 2. The following table summarizes the productivities of two people in cleaning
Rooms per hour
Sharyl 3 2
1. Jerry 1 1
b. Who has the absolute advantage in vacuuming? Who has the absolute
advantage in dusting?
c. Calculate each person’s opportunity cost in each task. Who has the
comparative advantage in each task?
d. Suppose Jerry proposes to dust 20 rooms for Sharyl if she will vacuum 25
rooms for him. In terms of rooms vacuumed, what is Sharyl’s price to
have one room dusted under this proposal? What is Jerry’s price of
having one room vacuumed (in terms of rooms dusted)? Is this proposal