ECON 2010 Study Guide - Quiz Guide: Comparative Advantage, Absolute Advantage, Opportunity Cost

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Published on 17 Apr 2019
School
TNTECH
Department
Economics
Course
ECON 2010
Professor
PROBLEMS AND APPLICATIONS
Comparative Advantage and Absolute Advantage
1. Maria can read 20 pages of economics in an hour. She can also read 50 pages of
sociology in an hour. She spends 5 hours per day studying.
a. Draw Maria’s production possibilities frontier for reading economics and
sociology.
b. What is Maria’s opportunity cost of reading 100 pages of sociology?
2. Pat and Kris are roommates. They spend most of their time studying (of course), but they
leave some time for their favorite activities: making pizza and filtering water. Pat takes
4 hours to filter a bottle of water and 2 hours to make a pizza. Kris takes 6 hours to filter
a bottle of water and 4 hours to make a pizza.
a. What is each roommate’s opportunity cost of making a pizza? Who has the
absolute advantage in making pizza? Who has the comparative advantage in
making pizza?
b. If Pat and Kris trade foods with each other, who will trade away pizza in
exchange for water?
c. The price of pizza can be expressed in terms of bottles of water. What is the
highest price at which pizza can be traded that would make both roommates better
off? What is the lowest price? Explain.
3. Suppose a gardener produces both green beans and corn in her garden. If she must give
up 14 bushels of corn to get 5 bushels of green beans, then calculate her opportunity cost
of 1 bushel of green beans.
4. Mike and Sandy are two woodworkers who both make tables and chairs. In one month,
Mike can make 4 tables or 20 chairs, where Sandy can make 6 tables or 18 chairs. Given
this, calculate the opportunity cost of 1 table for both Mike and Sandy.
5. If Wrex can produce more math problems per hour and more book reports per hour than
Maxine can, then Wrex cannot gain from trading math problems and book reports with
Maxine. Explain why this statement is true or false.
6. Jake can complete an oil change in 45 minutes and he can write a poem in 90 minutes.
Ming-la can complete an oil change in 30 minutes and she can write a poem in 90
minutes. Jake's opportunity cost of writing a poem is lower than Ming-la's opportunity
cost of writing a poem. True of false? What is Jake’s opportunity cost of writing a
poem?
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Document Summary

Comparative advantage and absolute advantage: maria can read 20 pages of economics in an hour. She can also read 50 pages of sociology in an hour. She spends 5 hours per day studying: draw maria"s production possibilities frontier for reading economics and sociology, what is maria"s opportunity cost of reading 100 pages of sociology, pat and kris are roommates. They spend most of their time studying (of course), but they leave some time for their favorite activities: making pizza and filtering water. 4 hours to filter a bottle of water and 2 hours to make a pizza. Explain: suppose a gardener produces both green beans and corn in her garden. Mike can make 4 tables or 20 chairs, where sandy can make 6 tables or 18 chairs. Given this, calculate the opportunity cost of 1 table for both mike and sandy: if wrex can produce more math problems per hour and more book reports per hour than.

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