Study Guides (299,522)
CA (140,978)
UTSG (9,792)
ECO (742)
ECO100Y1 (112)
Quiz

ECO100Y1 Study Guide - Quiz Guide: Food Truck, Absolute Advantage, Opportunity Cost

2 pages158 viewsFall 2017

Department
Economics
Course Code
ECO100Y1
Professor
peterfoltin
Study Guide
Quiz

This preview shows half of the first page. to view the full 2 pages of the document.
DEPARTMENT OF ECONOMICS ECO101
UNIVERSITY OF TORONTO PETER FOLTIN
1
Purpose:
1. Reinforce your understanding of opportunity costs in the context of a producer who has
to allocate a resource between the production of two goods.
2. Experience firsthand that differences in opportunity costs lead to mutually beneficial
both items.
3. Have some fun!
How To Prepare for Tutorial:
We will be playing a game in tutorials this week. To prepare (and help you play better), I
suggest:
1. Complete the questions below.
2. Watch the two-minute video: https://goo.gl/zr0nvi
3. Bring to tutorial the cheat sheet on the next page. Fill it out before tutorial! (Oh, and
bring something to write with!)
Pre-Tutorial Prep Problems
Orange and Blue are two food trucks that produce burgers and fries. The table below indicates,
for each food truck, how many of each item can be produced in a minute of time:
Burgers
Fries
Orange
4 burgers/minute
8 fries/minute
Blue
2 burgers/minute
1 fries/minute
Productivity of Orange and Blue for making Burgers and Fries
1. Which food truck has an absolute advantage in producing Burgers? Which food truck as
an absolute advantage in producing Fries?
2. Assume that each food truck is using all of its time. What is Blues opportunity cost of
producing burgers? Fries? What is Oranges opportunity cost of producing burgers?
Fries? (Use this answer to fill out the table on the next page.)
3. If there is a trade that makes both Orange and Blue better off, which food truck trades
away fries and gets burgers? Which food truck trades away burgers and gets fries?
4. Assume that you are the food truck that trades away fries. What is the minimum
number of burgers you must get in order to be willing to trade away an order of fries?
(Hint: what did you give up to make that order of fries?)
5. Assume that you are the food truck that trades away burgers. What is the minimum
number of burgers you must get in order to be willing to trade away an order of fries?
(Hint: what did you give up to make that order of fries?)