Individual assignment 1

1.1 Ten principles of economics

a. How would you respond if your instructor gave daily quizzes on the course? Is this a
positive or a negative incentive?
b. Compare your standard of living with that of your parents when they were the same age as
you are now. Ask them or somebody you know around their age to recall where they were
living and what they owned. What has happened to the average standard of living over the
last 25 years? Explain your answer.
Answer:
a.
Daily day quizzes, in my opinion, will have a negative impact on students. First, taking
examinations every studying day can reduce the overall quality of students' learning. This
course is scheduled every two days, plus it takes a lot of time to review and summarize all
the knowledge, which means that students must trade off the time of other subjects and
activities to study and review this subject every single day. Therefore, despite the progress
in this class, students will still face bad results.
Second, taking too many tests may lead to adverse reactions. Anxiety and drowsiness are
two detrimental effects of the quiz that might result in low scores, low self-esteem and peer
pressure. As a result, this inadvertently creates demovation on students.
b.
Living standards from more than two decades ago are vastly different from those of today.
First, the rapid development of technology and facilities has a great impact on people's
standard of living. The world has witnessed an amazing transformation of advanced
devices, which support people in aspects of life such as production, entertainment,
communication… In addition, Vietnamese people in the 1990s had to deal with a shortage
of water, power, and insufficient transportation infrastructure, but thanks to the extensions
of facilities, they can now use them more conveniently.
Second, young people nowadays have access to many more services with greater income
than previous generations. Medical and educational services are becoming more widely
available. Furthermore, the Vietnamese formerly had very little choice in terms of goods;
however, thanks to globalization and international trade, they may now consume a wide
range of foreign products. In addition, even if individuals had to work longer and harder in
the past, their income was still quite modest in comparison to today's. The aforementioned
1
 are just a few of the many factors that increase Vietnamese people's life satisfaction and
life expectancy compared to 25 years ago.
In general, owing to several modern innovations, the living standards of today's youth have
greatly increased.

1.2 Thinking like an economist

a. Point A represents the possible amount of cars and bicycles that can be sold.
b. The movement along the curve from point A to point B shows the opportunity cost of
producing more bicycles.
c. If we have high unemployment, the PPF shifts inward.
d. If an improved process for manufacturing cars is introduced, the entire PPF will shift
outward.

Answer:
a. False. It represents the number of cars and bicycles are produced.
b. False. It shows the opportunity cost of producing more cars.

2
 c. True. When there is high unemployment, less commodities are produced, and the PPF
shifts inward.
d. False. The curve will only move out along the x-axis (cars), not the entire PPF.

1.3 Interdependence and gains from trade

Michael and Angelo live in a small town in Italy. They work as artists. Michael is the more
productive artist. He can produce 10 small sculptures each day but only 5 paintings. Angelo can
produce 6 sculptures each day but only 2 paintings.

a. What is the opportunity cost of a painting for each artist?

b. Based on your answer in part a, who has a comparative advantage in producing paintings?
c. If the two men decide to specialize, who should produce the sculptures and who should
produce the paintings?
Answer:
a.
10
The opportunity cost of a painting for Michael: = 2 (sculptures)
5
6
The opportunity cost of a painting for Angelo: = 3 (sculptures)
2

b. The opportunity cost of producing a painting of Michael is lower than that of Angelo (2<3);
therefore, Michael has a comparative advantage in producing paintings.
1 1
c. The opportunity cost of a sculpture for Michael and Angelo is respectively 2 and 3, which

makes Angelo has a comparative advantage in producing sculptures. In conclusion,

Michael should produce the paintings and Angelo should produce the sculptures.