What is the opportunity cost of an increase in income

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Reference no: EM13209832

The following numbers measure the tradeoff between
grades and income:
Studying GPA
Working Income
60 60 4.0 0 $0
60 40 3.0 20 $100
60 30 2.0 30 $150
60 10 1.0 50 $250
60 0 0.0 60 $300
a. Calculate the opportunity cost of an increase in the number of hours spent studying in order to earn a 3.0 grade point average (GPA) rather than a 2.0 GPA.
b. Is the opportunity cost the same for a move from a 0.0 GPA to a 1.0 GPA as it is for a move from a 1.0 GPA to a 2.0 GPA?
c. What is the opportunity cost of an increase in income from $100 to $150?

Suppose a second individual has the following
tradeoffs between income and grades:
Studying GPA
Working Income
60 50 4.0 10 $60
60 40 3.0 20 $120
60 20 2.0 40 $240
60 10 1.0 50 $300
60 0 0.0 60 $360
a. Define comparative advantage.
b. Does either individual (the one in exercise 4 or the one in exercise 5) have a comparative advantage in both activities?
c. Who should specialize in studying and who should specialize in working?

Plot the PPC of a nation given by the following data.
Combination Health Care
All Other
A 0 100
B 25 90
C 50 70
D 75 40
E 100 0
a. Calculate the marginal opportunity cost of each combination.
b. What is the opportunity cost of combination C?
c. Suppose a second nation has the following data.
Plot the PPC, and then determine which nation has whether the two nations can gain from specialization and trade.
Combination Health Care
All Other
A 0 50
B 20 40
C 40 25
D 60 5
E 65 0

Reference no: EM13209832

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