Econ
Homework Assignments
Problems & Applications
Chapter 1 Homework 4. You win $100 in a basketball pool. You have a choice between spending the money now or putting it away for a year in a bank account that pays 5% interest. What is the opportunity cost of spending the $100 now?
5. The company that you manage has invested $5 million in developing a new product, but the product is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $3 million. If it would cost $1 million to finish development and make the product, should you go ahead and do so? What is the most that you should pay to complete the development?
Chapter 2 Homework
4. An economy consists of three workers: Larry, Moe, and Curly. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars; and Curly can either mow two lawns or wash one car. a. Calculate how much each service is produced under the following circumstances which are labeled a b c and d - all three spend all their time mowing lawns (A) - all three spend all their time washing cars (B) - all three spend half their time on each activity(C) _ Larry spends half his time on each activity, while Mo only washes cars and curling only mows lawns (D)
Chapter 3 Homework
9. Are the following statement is true or false? Explain in each case. a.. Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods.
b. Certain very talented people have a comparative advantage in everything they do.
c. If a certain trade is good for one person, it can’t be good for the other one.
d. If a certain trade is good for one person, it is always good for the other one.
e. If trade is good for a country, it
Problems & Applications
Chapter 1 Homework 4. You win $100 in a basketball pool. You have a choice between spending the money now or putting it away for a year in a bank account that pays 5% interest. What is the opportunity cost of spending the $100 now?
5. The company that you manage has invested $5 million in developing a new product, but the product is not quite finished. At a recent meeting, your salespeople report that the introduction of competing products has reduced the expected sales of your new product to $3 million. If it would cost $1 million to finish development and make the product, should you go ahead and do so? What is the most that you should pay to complete the development?
Chapter 2 Homework
4. An economy consists of three workers: Larry, Moe, and Curly. Each works 10 hours a day and can produce two services: mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car; Moe can either mow one lawn or wash two cars; and Curly can either mow two lawns or wash one car. a. Calculate how much each service is produced under the following circumstances which are labeled a b c and d - all three spend all their time mowing lawns (A) - all three spend all their time washing cars (B) - all three spend half their time on each activity(C) _ Larry spends half his time on each activity, while Mo only washes cars and curling only mows lawns (D)
Chapter 3 Homework
9. Are the following statement is true or false? Explain in each case. a.. Two countries can achieve gains from trade even if one of the countries has an absolute advantage in the production of all goods.
b. Certain very talented people have a comparative advantage in everything they do.
c. If a certain trade is good for one person, it can’t be good for the other one.
d. If a certain trade is good for one person, it is always good for the other one.
e. If trade is good for a country, it