ECO111 Microeconomics

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Individual Assignment 01
Question 1. (2 points)

1. What is your opportunity cost of each of the following?

a. Attending your next economics class meeting.
b. Skipping your next economics class meeting.
c. Taking an all expenses paid trip to the Lasvegas for a week during this semester.

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? (3 points)

No of pizzas MB (Marginal Benefit)

0 0
1 7
2 4
3 2
4 1

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?

Question 2. (3 points)
 1. a. What is defined as absolute advantage?
b. What is defined as comparative advantage?
c. Case 1: Output approach
Two commodities and two countries
Given the resources, Singapore and Malaysia can produce the following products –
television sets and cars (see Table 01)
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? Calculate and Explain your answer.
+ Which country has the comparative advantage either in the production of TV sets or
in the production of Cars over the other? Calculate and Draw your PPF to illustrate
d. Case 2: Input approach
Two commodities and two countries
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:
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? Calculate and Explain
+ Which country should specialize in the production of Coal? Calculate and Explain
e. Case 3: Input approach
Two countries but multiple commodities
The following Table 03 shows the numbers of man – days taken to produce an
equivalent amount of six commodities in each of the two countries – Switzerland and
Sweden.
Countries Coal Cotton Wool Iron Wheat Maize
Switzerland 120 60 70 100 140 80
Sweden 100 25 35 90 90 20
Table 03
+ Assuming that there are no other costs of production. Which two commodities is
Sweden most likely to import from Switzerland? Calculate and Explain your answer

Question 3. Write an Essay with 300 words as follows;

+ What are the benefits/gains and disadvantages from international trade? Write an essay
with 400 words and provide your answers with real example in the context of Vietnam
international trade relations