INTRODUCTION TO ECONOMICS

--- PROBLEM SET 1 ---

1.
a. If I go to a BlacPink concert , I will give up a benefit of $190 . But I saved $180
on tickets. Hence the opportunity cost is $190 - $180 = $10.
b. If I get a free ticket to BTS, the cost for me to have a chance to meet BlackPink
will be $190, higher than before.
c. The 3rd solution does not affect the above answer. Because the 2nd option is
calculated opportunity cost.
2.
a. The one with the absolute advantage is the potato.
b. The person with comparative advantage is the rice.
3.

( CHINA) ( U.S)
a. According to the chart, if China spends half its time making computers and half
making shirts, it would be at point (C). Just like in the US, if you spend half the
time making shirts and the other half making computers, it will be at point (U).
b. If the two countries open up to trade, China will make shirts and the US will
make computers. China has a low opportunity cost in making shirts, and the US
also has a low opportunity cost in making computers. So China will be at point
(C1) and the US will be at point (U1).
c.
Opportunity cost = Commodity Rejected : Commodity chosen
U.S shirts = 20 : 100
China shirt = 10 : 100
d.
Shirt Comp
U.S 0.2 5
China 0.1 10
Through the above cost table, the price of 1 computer for China will be 10 shirts,
for the US will be 5 shirts.