Basic Economic Q&A

Answer 5 economic questions

Each answer should be at least one paragraph.

Urgent work, need in 12 hours.

1, (Marginal Analysis) The owner of a small pizzeria is deciding whether to increase the radius of delivery area by one mile. What considerations must be taken into account if such a decision is to increase profitability?

2,(Sunk Cost and Choices) Suppose you go to a restaurant and buy an expensive meal. Halfway through, despite feeling full, you decide to clean your plate. After all, you think, you paid for the meal, so you are going to

eat all of it. What’s wrong with this thinking?

3, (Absolute and Comparative Advantage) You have the following information concerning the production of wheat and cloth in the United States and the United Kingdom:

Labor Hours Required to Produce One Unit

United Kingdom United States

Wheat 2 1

Cloth 6 5

What is the opportunity cost of producing a unit of wheat in the United Kingdom? In the United States?

Which country has an absolute advantage in producing wheat? In producing cloth?

Which country has a comparative advantage in producing wheat? In producing cloth?

Which country should specialize in producing wheat? In producing cloth?

4,(Rational Self-Interest) Discuss the impact of rational self-interest on each of the following decisions.

Whether to attend college full time or enter the workforce full time

Whether to buy a new textbook or a used one

Whether to attend a local college or an out-of-town college

5, (Association Versus Causation) Suppose I observe that communities with lots of doctors tend to have relatively high rates of illness. I conclude that doctors cause illness. What’s wrong with this reasoning?

Economics

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