1. Suppose South Korea can produce 100 computer chips with 10 hours of labor input and 50 bed linens with 6 hours of labor input. The US can produce 100 computer chips with 8 hours of labor input and 50 bed linens with 4 hours of labor input.
a) What is the opportunity cost of producing 100 computer chips for South Korea?
b) What is the opportunity cost of producing 50 bed linens for South Korea?
c) What is the opportunity cost of producing 100 computer chips for the US?
d) What is the opportunity cost of producing 50 bed linens for the US?
e) Using comparative advantage, which country should import bed linens? Why?
2. a) If free trade is so good why do some people complain? Give a specific example and please refer to the Dub - Chud example. Be sure to be clear and explicit about the ‘complainers' and why they are complaining.
b) Name two groups that typically protest at WTO (World Trade Organization) meetings.
3. In three sentences or less, explain exactly what it means to say "there is no such thing as a free lunch."
4. Suppose that I make $15 per hour and you make $20 per hour and we both like to eat hamburgers that cost $5 each. Compare my real wage (in terms of hamburgers) to your real wage.
5. Give an example of a decision that is rational ex-ante but irrational ex-post. Under what conditions will this rationality be different and under what conditions will this rationality (ex-ante and ex-post) be the same.
6. Using marginal analysis, explain how you would determine how much to eat at an all you can eat restaurant.
7. Go to the index of economic freedom and identify which of the ten "freedom" criteria the United States does best on (in terms of economic freedom) and which of the ten criteria does the United States score the worst in terms of economic freedom.
8. Write down a normative economic statement and a positive economic statement. Explain in detail, what the difference is when comparing normative and positive economic statements.