1. Suppose Timmy needs 8 hours to make a thumbtack, while Nancy needs 6 hours. Suppose Timmy needs 6 hours to make a needle, while Nancy needs 4 hours. We then know that:

• .Timmy has a comparative advantage in thumbtacks.
• Nancy has a comparative advantage in thumbtacks.
• Both Timmy and Nancy have a comparative advantage in thumbtacks.
• Neither Timmy nor Nancy has a comparative advantage in thumbtacks.

2. Suppose Timmy needs 8 hours to make a thumbtack and 6 hours to make a needle. Suppose Timmy currently has 24 hours to work. If Timmy only works 12 hours, then:

• Timmy is lazy
• Timmy is on is PPF
• Timmy is inside (to the left) of his PPF
• Timmy is beyond (to the right) of his PPF

3. Suppose Timmy needs 8 hours to make a thumbtack, while Nancy needs 6 hours. Suppose Timmy needs 6 hours to make a needle, while Nancy Noodle needs 4 hours. We then know that:

• The price of a needle will be between 4 and 6 hours
• The price of a needle will be between 1.5 and 1.33 thumbtacks
• The price of a needle will be 1.5 needles
• The price of a needle will be between 2/3 and 3/4 thumbtacks

4. If the long-term price elasticity for carrots is estimated to be -1.6, then short-term price elasticity is expected to be:

• -1.6
• greater than -1.6 (meaning between -1.6 and 0).
• less than -1.6. (meaning between -1.6 and negative infinity)
• none of the above.