1.Nixon can catch 20 pounds of fish an hour or pick 30 pounds of fruit an hour. Calculate

Nixon's opportunity cost of a pound of fruit.

2.The opportunity cost of producing one ton of wheat for Country Gamma is 6 tons of corn.

The opportunity cost of producing one ton of wheat for Country Beta is 4 tons of corn. Which

Does the country have a comparative advantage in the production of wheat?

3.Nut House produces only cashews and almonds. The table below

shows the maximum possible output combinations of the two nuts using all resources and currently available technology. Answer the questions that follow the table.

Possible Output Almonds (X) Cashews (Y)

Combinations (thousands of pounds) (thousands of pounds)

A 0 35

B 20 30

C 35 25

D 47 20

E 57 15

F 64 10

G 68 5

H 70 0

a. Graph Nut House's production possibilities frontier. Put almonds on the horizontal axis and cashews on the vertical axis. Mark all output combination points cashews and almonds on the graph.

b. Suppose Nut House is currently producing at point D. What is the opportunity cost of producing an additional 10,000 pounds of almonds? Hint: how many pounds of cashews are foregone or given up.

c. Find the slope values between points AB, BC, CD, DE, EF, FG, GH. As the production moves from point A to Point H what happens to the opportunity cost (slope of the curve) of producing more and more almonds? Does it increase, decrease, or remain constant? Show

your work and Explain your answer.

4.Refer to Table 2.

The table below shows the production of pecans and pears in Missouri and

Washington. Answer the questions that follow.

Table 2

Pecans tons per year Pears tons per year

Missouri 10,000 15,000

Washington 13,000 26,000

a. Which state has an absolute advantage in the production of Pecans?

b. Which state has an absolute advantage in the production of Pears?

c. What is Missouri's opportunity cost of producing one ton of Pecan? What is Washington's opportunity cost of producing one ton of Pecan? Show your work.

d. What is Missouri's opportunity cost of producing one ton of Pear? What is Washington's opportunity cost of producing one ton of Pear? Show your work.

e. Which state has a comparative advantage in the production of Pecans? Which state has a comparative advantage in the production of Pears?

f. Sketch the production possibility frontier for both states if they produce for 2 years.

5.Suppose your expenses for this term are as follows: tuition: $28,000, room and board: $9,000, books and other educational supplies: $2,500. Further, during the term, you can only work part-time and earn $16,000 instead of your full-time salary of $42,000. What is the opportunity cost of going to college this term, if your room and board expenses would be the

same even if you did not go to college?