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Chapter 2: Q. 2.17 (page 47)
Using only the concept of comparative advantage, evaluate this statement: 鈥淎 professor with a Ph.D. in physics should never mow his or her own lawn, because this would fail to take into account the professor's comparative advantage."
True.
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After the concert discussed in Problems, 2-3 is over and you and your friend are traveling home, you discuss how each of you might otherwise have used the four hours devoted to attending the concert. The four hours could have been used to study, watch a sporting event on TV, or get some extra sleep. Your friend decides that if she had not spent four hours attending the concert, she would have chosen to study, and you reply that you otherwise would have watched the televised sporting event. Identify the relevant opportunity costs for you and your friend for allocating your four hours to attending the concert. Explain briefly.
Construct a production possibilities curve for a nation facing increasing opportunity costs for producing food and video games. Show how the PPC
changes have given the following events.
(a) A new and better fertilizer is invented.
(b) Immigration occurs, and immigrants鈥� labor can be employed in both the agricultural sector and the video game sector.
(c) A new programming language is invented that is less costly to code and is more memory-efficient, enabling the use of smaller game cartridges.
(d) A heat wave and drought result in a 10 percent decrease in usable farmland.
Consider a change in the table in Problems 2-6. The student鈥檚 set of opportunities is now as follows: Does the PPC illustrate the law of increasing additional cost? What is the opportunity cost to this student for the additional amount of study time on economics required to move her grade from 60 to 70? From 90 to 100?
| Economics | Biology |
| 100 | 40 |
| 90 | 50 |
| 80 | 60 |
| 70 | 70 |
| 60 | 80 |
| 50 | 90 |
| 40 | 100 |
You can wash, fold, and iron a basket of laundry in two hours and prepare a meal in one hour. Your roommate can wash, fold, and iron a basket of laun-
dry in three hours and prepare a meal in one hour. Who has the absolute advantage in laundry, and who has an absolute advantage in meal preparation? Who has the comparative advantage in laundry, and who has a comparative advantage in meal preparation?
You and a friend decide to spend \(100 each on concert tickets. Each of you alternatively could have spent the \)100 to purchase a textbook, a meal at a highly-rated local restaurant, or several Internet movie downloads. As you are on the way to the concert, your friend tells you that if she had not bought the concert ticket, she would have opted for a restaurant meal, and you reply that you otherwise would have downloaded movies. Identify the relevant opportunity costs for you and your friend for the concert tickets that you purchased. Explain briefly.
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