1) Joann divides her consumption between books and games. Both books and games are normal goods for Joann. If the price of games rises, and Joann has a very strong income effect,

(a) Do you expect her to buy more, fewer, or the same number of games?

(b) Do you expect her to buy more, fewer, or the same number of books?

2)Three students are working on a group project. The project involves three distinct tasks: research, writing, and presentation. One student, Jack, is faster at all three of these tasks than the other members of the group.

(a) Does Jack have an absolute advantage in all three tasks?

(b) Does Jack have a comparative advantage in all three tasks?

(c) Why will this group will be more efficient if they specialize according to comparative advantage rather than absolute advantage?