Week #1 Assignment (click here to submit)

After reading chapters 1, and 2 as indicated, do the following exercises:

Chapter 1:

1. To which category of resources does each of the following belong?

a. A taxi

b. Computer software

c. One hour of legal counsel

d. A parking lot

e. A forest

f. The Mississippi River

g. An individual introducing a new way to market products on the Internet.

2. If behavior is governed by rational self-interest, why do people make charitable contributions of time and money?

Chapter 2:

3. Discuss the ways in which the following conditions might affect the opportunity cost of going to a movie tonight:

a. You have a final exam tomorrow.

b. School will be out for one month starting tomorrow.

c. The same movie will be on TV next week.

d. The Superbowl is on TV.

4. You can either spend spring break working at home for $100 per day for five days or go to Florida for the week. If you stay home, your expenses will total about $120. If you go to Florida, the airfare, hotel, food and miscellaneous expenses will total about $1,000. What’s your opportunity cost of going to Florida?

5. You have the following information concerning the production of wheat and cloth in the United States and the United Kingdom:

Labor Hours Required to Produce One Unit

United Kingdom United States

Wheat 2 1

Cloth 6 5

a. What is the opportunity cost of producing a unit of wheat in the United Kingdom? In the United States?

b. Which country has an absolute advantage in producing wheat? In producing cloth?

c. Which country has a comparative advantage in producing wheat? In producing cloth?

e. Which country should specialize in producing wheat? In producing cloth?