Principles of Micoroeconomics, Student Value Edition
11th Edition
ISBN: 9780133024265
Author: Karl E. Case
Publisher: PEARSON
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Chapter 10, Problem 10P
To determine
Tradeoffs and work.
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Suppose you currently earn $40,000 a year. You are considering a job that will increase your lifetime earnings by $400,000 but that requires an MBA. The job will mean also attending business school full time for two years at an annual cost of $50,000. You already have a bachelor’s degree, for which you spent $150,000 in tuition and books.
Which of the above information is relevant to your decision on whether to take the job?
What is the opportunity cost of going to school to study MBA?
Should you take the job? [Note: You will need to get the MBA]
Alec and Ellie are the only detectives in the town of Broadchurch. They work together. Assume efficient production. Each has 10 hours in a day to allocate between conducting interviews and completing paperwork.
Alec takes 25 hours to complete one interview or 4 hours to complete one file of paperwork.
Ellie takes 15 hours to complete one interview or 20 hours to complete one file of paperwork.
What is Alec's Opportunity Cost of an interview in terms of files of paperwork? Enter a number only.
Note: The question here is asking you for the opp. cost in terms of files so you can just enter a number. On the assessments if the question is phrased as "what is the opportunity cost?", you will have to enter the units as well, without which you will not get full credit.
Elliot and Jordy find themselves on a deserted island. The only two activities available are fishing and finding pineapples. In a full day, Elliot can catch 6 fish or find 12 pineapples or some linear combination of the two; in the same time, Jordy can catch 4 fish or find 10 pineapples or some linear combination of the two.Â
What are each individual’s marginal costs of fishing and finding pineapples? (must provide the correct answer for full credit, no additional work is necessary)
Who has an absolute advantage in fish production? Who has an absolute advantage in finding pineapples? Briefly explain your reasoning.
Who has a comparative advantage in fish production? Who has a comparative advantage in finding pineapples? Briefly explain your reasoning.
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