Econ 101 Problem Set

Topics: Automobile, Economics, Comparative advantage Pages: 1 (305 words) Published: January 7, 2015

Problem Set 1

1. Tata can wax a car in 20 minutes or wash a car in 60 minutes. Gab can wax a car in 15 minutes or wash a car in 30 minutes. What is each man’s opportunity cost of washing a car? Who has absolute advantage in washing cars? Who has comparative advantage in washing cars?

2. Robert and Deo are auto mechanics. Robert takes 4 hours to replace a clutch and 2 hours to replace a set of brakes. Deo takes 6 hours to replace a clutch and 2 hours to replace a set of brakes. Determine whether anyone has an absolute advantage at either task and, for each task, determine who has a comparative advantage.

3. Abuseyaf can pick 4 kilos of coffee in an hour or 2 kilos of nuts. Terrorist can pick 2 kilos of coffee in an hour or 4 kilos of walnuts. Each works 6 hours a day. a. What is the maximum number of kilos of coffee the two can pick in a day? b. What is the maximum number of kilos of walnuts the two can pick in a day? c. If Abuseyaf and Terrorist were picking the maximum number of kilos of coffee when they decided that they would like to begin picking 4 kilos of walnuts per day, who should pick the walnuts and why? How many kilos of coffee would they still be able to pick? d. Now suppose Abuseyaf and Terrorist were picking the maximum number of kilos of walnuts when they decided that they would like to begin picking 8 kilos of coffee per day, who should pick the coffee and why? How many kilos of walnuts would they still be able to pick? e. Would it be possible for Abuseyaf and Terrorist to pick a total of 26 kilos of walnuts and 20 kilos of coffee each day? If so, how much of each good should each person pick?
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