ECO111 Microeconomics

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Student Information
Name: ĐỒNG THỊ TÌNH Roll number: HS163383
Room No: Class: IB1610

FOR TEACHER ONLY

MARK MARKED BY Signature of Proctor
(NAME AND SIGNATURE)

Individual Assignment 01

Questions:

1. What is your opportunity cost of each of the following? (2 points)

a. Attending your next economics class meeting.
- A day out with friends
- Sleep a few more hours
- Watch a favorite movie
- Make money in one session
b. Skipping your next economics class meeting.
- Improve knowledge of economics
- Tuition has been paid
- Get specific points when participating in class meetings
- Get bonus points for answering the teacher's questions
- Meet, chat with friends, learn a lot from them
c. Taking an all expenses paid trip to Vegas for a week during this semester.
- Knowledge from taking classes
- Time with friends and family
- Miss my work
2. The local pizza restaurant is advertising a special. If you buy one individual sized pizza,
you get the next one at 25% off, the third one for 50% off and the fourth one for 75% off.
Your marginal benefit from eating pizza is shown in the table below. If the price of a pizza
is $6, how many should you buy? (2 points)

No of pizzas MB (Marginal Benefit)

 0 0
1 7
2 4
3 2
4 1

If the price of a pizza in $6, the next one at 25% off will be: $6 – ($6*25%) = $4.5
The third one for 50% off will have price is:$6 – ($6*50%) = $3
The fourth on for 75% off will have price is: $6 – ($6*75%) = $1.5
Base on the table we can see marginal benefit exceeds marginal cost for only the first
pizza (7>6). Therefore, if the price of a pizza is $6, I should buy only one.

3. The workers in a factory currently earn $120 for a 39 – hour week. The management
offers them a choice between either a straight 10% wage increase or an increase in the
weekly wage to $125 coupled with a reduction in hours from 39 to 37 hours. What is the
opportunity cost to each worker of opting for the 37 – hour week? (2 points)
- Case 1: If the worker chooses a 10% straight pay increase, their new salary for week
39 hours will be: $120 + ($120 * 10%) = $132
- Case 2: If an employee reduces their working hours from 39 hours to 37 hours, their
new salary will be $125. Case 1 will earn more than case 2. Thus, $132 for a 39 hours
week is the opportunity cost per worker working a 37-hour week.

4. Given the resources, Singapore and Malaysia can produce the following products –
television sets and cars (see Table 01) (2 points)

Countries TV sets Cars (units)

Singapore 100 50
Malaysia 60 40
Table 01
+ Which country has the absolute advantage in the production of both TV sets and
Cars over the other?

Given the same amount of resources, Singapore can produce more both TV
sets and cars than Malaysia, with 100 TV sets and 50 cars compared to 60 and
40 respectively of Malaysia.
➔ Singapore has the absolute advantage in the production of both TV sets and
cars over Malaysia.

+ Which country has the comparative advantage either in the production of TV sets
or in the production of Cars over the other?

Singapore: Instead of producing 1 TV set, they can produce 0.5 car

Malaysia: Instead of producing 1 TV set, they can produce 0,7 car
➔ Malaysia has the comparative advantage in the production of Cars.

5. Give the resources, America and England can produce one unit for both Steel and Coal
in terms of number of working hours shown as follows: (2 points )

Countries One unit of Steel One unit of Coal

required required
America 80 man-hours 90 man-hours
England 120 man-hours 100 man-hours
 ( Table 02 )

+ Which country should specialize in the production of Steel?

▪ In America: 80 man-hours/ 90 man-hours, the opportunity cost is 0.89
▪ In England: 120 man-hours/ 100 man-hours, the opportunity cost is 1.2
The opportunity cost of the America is lower than that of the England.
➔ America should specialize in the production of Steel.
+ Which country should specialize in the production of Coal?
In America: 90 man-hours/ 80 man-hours, the opportunity cost is 1.125
▪ In England: 100 man-hours/ 120 man-hours, the opportunity cost is 0.83
The opportunity cost of the England is lower than that of the American.
➔ England should specialize in the production of Coal.