EC1101E: Introduction To Economic Analysis
Semester 1 (2009/2010)
Answer all questions.
|Production Possibilities of Motorcycles and Cars |
|Combination |Motorcycles |Cars |
|A |0 |6 |
|B |15 |5 |
|C |25 |4 |
|D |33 …show more content…
decreases the total utility of the consumer. b. changes the consumer’s preferences. c. increases the number of combinations of goods a consumer can purchase. d. has no effect on the maximum combination of goods the consumer can purchase.
14. Consider two individuals, Bill and Steve, who produce software and computer hardware. Bill’s and Steve’s weekly productivities are shown in the table below. Which of the following is true?
| |Software |Computer Hardware |
|Bill |6 |4 |
|Steve |3 |2 |
a. Bill has an absolute advantage in producing both goods, and a comparative advantage in producing software. b. Bill has an absolute advantage in producing both goods, and a comparative advantage in producing computer hardware. c. Bill has an absolute and comparative advantage in producing both goods. d. Bill has an absolute advantage in producing both goods, but no one has a comparative advantage in producing either good.
15. The table below presents Jit’s total utilities of sweaters and T-shirts. Suppose that the price of sweaters is $40 and the price of a T-shirt is $20. Jit has $300 to purchase sweaters and T-shirts. How many T-shirts will Jit purchase in equilibrium, assuming that he