EXAM ECO 182 EXAM QUESTIONS AND ANSWERS WITH
COMPLETE SOLUTIONS VERIFIED
A. B
xyxy
9 0 4.5
8 0.67 4
7 1.33 3.5
623
Does either have a comparative advantage? What are the opportunity costs of
A+B to produce X+Y? What does comparative advantage tell us?
A has a comparative advantage in producing X. A gives up 0.67 Y to produce 1 X, B
gives up 1 Y to produce 1 X. Comparative advantage tells us who should be producing
what good in order to maximize total output.
Why are prices important?
Prices provide signals to buyers and sellers. Allows us to allocate resources to highest
valued uses.
Friedman discussed the role of government in a free society.
Government should set and enforce rules. Also should prevent coercion of one group by
another, prevent anti-competitive behavior, defend external threats, and fund goods
such as education.
The difference between quantity demanded and demand, why is it important?
COMPLETE SOLUTIONS VERIFIED
A. B
xyxy
9 0 4.5
8 0.67 4
7 1.33 3.5
623
Does either have a comparative advantage? What are the opportunity costs of
A+B to produce X+Y? What does comparative advantage tell us?
A has a comparative advantage in producing X. A gives up 0.67 Y to produce 1 X, B
gives up 1 Y to produce 1 X. Comparative advantage tells us who should be producing
what good in order to maximize total output.
Why are prices important?
Prices provide signals to buyers and sellers. Allows us to allocate resources to highest
valued uses.
Friedman discussed the role of government in a free society.
Government should set and enforce rules. Also should prevent coercion of one group by
another, prevent anti-competitive behavior, defend external threats, and fund goods
such as education.
The difference between quantity demanded and demand, why is it important?
