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Chapter 2: Q. 2.20 (page 47)

Suppose that in Figure 2-1, a student currently is allocating her study time in such a way that she is earning a C in mathematics and a C in economics. If the student desires to boost her economics grade to an A, how must she alter the number of hours per week that she studies economics? How must she alter the number of hours per week that she studies mathematics?

Short Answer

Expert verified

Economics- 6

Maths- 0

Step by step solution

01

Step1. Introduction

Opportunity cost is the cost of choosing one alternative over the next best alternative. More of it is like a tradeoff between the option we choose and the next best alternative.

02

Step2. Explanation

The person wants to move from combination of C and C in maths and economics to A in economics, which means F in maths. For a A in economics, 3 more hours are required, i.e. from 3 hours currently to 6 hours. This implies no time left for studying maths.

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Most popular questions from this chapter

In spite of the lower opportunity cost of rail-gun projectiles instead of missiles, does the U.S. Navy continue to face an increasing additional cost, in terms of forgone ship production, to obtain additional weapons? Explain briefly.

Based on the information in Problems 2-15, should you and your roommate specialize in a particular task? Why? And if so, who should specialize in which task? Show how much labor time you save if you choose to “trade” an appropriate task with your roommate as opposed to doing it yourself.

Evaluate why everyone, whether poor or affluent, faces the problem of scarcity.

Recently, a woman named Mary Krawiec attended an auction in Troy, New York. At the auction, a bank was seeking to sell a foreclosed property: a large Victorian house suffering from years of neglect in a neighborhood in which many properties had been on the market for years yet remained unsold. Her \(10 offer was the highest bid in the auction, and she handed over a \)10 bill for a title to ownership. Once she acquired the house, however, she became responsible for all taxes on the property and for an overdue water bill of \(2,000. In addition, to make the house habitable, she and her husband devoted months of time and unpaid labor to renovating the property. In the process, they incurred explicit expenses totaling \)65,000. Why do you suppose that the bank was willing to sell the house to Ms. Krawiec for only $10? (Hint: Contemplate the bank’s expected gain, net of all explicit and opportunity costs, if it had attempted to make the house habitable.)

A nation’s residents can allocate their scarce resources either to producing consumer goods or to producing human capital—that is, providing themselves with training and education. The following table displays the production possibilities for this nation:

Production Combination	Units of Consumer Goods	Units of Human Capital
A	0	100
B	10	97
C	20	90
D	30	75
E	40	55
F	50	30
G	60	0

(a) Suppose that the nation’s residents currently produce combination A. What is the opportunity cost of increasing the production of consumption goods by 10 units? By 60 units?

(b) Does the law of increasing additional costs hold true for this nation? Why or why not?

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