Lecture Exercise #2Spring 2022You will work on these exercises during class on Friday, January 14th. You are strongly encouraged to work with 3 or 4 of your peers, where you will discuss and work through the problems together. The instructional team will circulate between groups to answer your questions and provide guidance. Post your answers on Poll Everywhere (PE) using the link provided by Professor Balaban. Note that the PE link will be opened on command during class and will close with 15-20 minutes left in class. A warning will be given a few minutes before the link is closed. We will review the answers after the link isclosed.Honor Code Notice: You are not permitted to upload any content from this course to the web in any form, including but not limited to Chegg, Course Hero, Coursera, Google Drive, etc. If you post my coursecontent, you may be violating my intellectual property rights. In utilizing web sources to upload or download course content, you risk violating the University’s Honor Code.1. A donut shop sells fresh baked donuts from 5 a.m. until 3 p.m. every day. The shop does not sell day-old donuts, so all unsold donuts are thrown away at 3 p.m. each day. The cost of making a dozen donuts is $1.50; there are no costs associated selling donuts or with throwing them away.If the manager has 10 dozen donuts left at 2:30 p.m. on a particular day, which of the following alternatives is most attractive?a. Lower the price of the remaining donuts, even if the price falls below $1.50 per dozen.b. Lower the price of the remaining donuts, but under no circumstances should the price fall below $1.50 per dozen, even if the donuts remain unsold.c. Throw the donuts away.It doesn’t matter if you fall below $1.50 – if no one is buying at $1.50 it is better to sell them for. Quarter than nothing at all!!This graph describes the production possibilities for an island nation. Use the graph to answer questions 2 and 3.C a r s1 , 0 0 05 0 , 0 0 0T o n s o f A g r i c u l t u r a l P r o d u c t s2. The opportunity cost of producing one car in this island nation isa. 5000 tons of agricultural products.b. 500 tons of agricultural products.c. 5 tons of agricultural products.d. 50 tons of agricultural products.3. Assuming efficient production, if 500 cars are produced on this island nationa. 50,000 tons of agricultural products are being produced.b. 25,000 tons of agricultural products are being produced.c. 45,000 tons of agricultural products are being producedd. 40,000 tons of agricultural products are being producedUse the following to answer question 4. The graph shows Shayna’s production possibilities frontier (PPF) for one day.H o u r s s t u d y i n g p e r d a y 9 8 H o u r s a t w o r k p e r d a y 8 9 4. Shayna could move from the bold PPF to the dashed PPF bya. finding a job that paid a higher wage.b. studying fewer hours but more effectively per hour.c. devoting fewer hours to sleeping.d. spending more time on the activity for which she has a comparative advantage.Tyler divides his time between studying Physics and studying Economics. He has discovered that based on his current study habits, he can earn grades as shown on this production possibilities curve (PPC). Use this graph to answer questions 5 and 6.P h y s i c s G r a d e 9 0 A 8 0 C 7 0 6 0 5 0 4 0 E 4 0 5 0 6 0 7 0 8 0 9 0 1 0 0 E c o n o m i c s G r a d e B D5. Tyler’s PPC is bowed out becausea. he is better at physics than at economics.b. his studying is subject to the principle of increasing opportunity costs.c. he is better at economics than at physics.d. he has failed to take advantage of his comparative advantage.6. Both of Tyler’s professors require at least a 65 to pass and a 90 to earn an A. After looking at his PPC, Tyler realizes thata. he cannot pass both classes.b. he can pass economics, but only if he fails physics.c. he can pass physics, but only if he fails economics.d. he could earn an A in economic and still pass physics.e. he can pass both classes.Gary and Emma run a food truck. The quantity of burritos and tacos that each can make in a week is provided in the graphs below. Use these graphs to answer questions 7 and 8.Gary’s PPF Emma’s PPF50 100 150 200 250 300 350 400 tacos50100150200250300350400450500burritos50 100 150 200 250 300 350 400 tacos50100150200250300350400450500burritos7. Who has the absolute advantage in making tacos? Who has the absolute advantage in making burritos?a. Gary; Emmab. Gary; Garyc. Emma; Garyd. Emma; Emmae. None of the above8. If Gary and Emma specialize in the good in which they have the comparative advantage, how many burritos and tacos will be produced?a. 400 burritos and 200 tacosb. 300 burritos and 400 tacosc. 500 burritos and 800 tacosd. 250 burritos and 400
View Full Document
Unlocking...