ECO102 Business Environment
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STUDENT INFORMATION
Name: Dao Thanh Toan Roll number: HE181420
Room No: 418 Class: GL2001
FOR TEACHER ONLY
MARK MARKED BY Signature of Proctor
(NAME AND SIGNATURE)
Individual Assignment 01
Question 1. (2 points)
1. What is your opportunity cost of each of the following?
a. Attending your next economics class meeting.
If I attending my next economics , I got knowledge instead of if I absent , I will eat with
my friends , watch a movie film with my girlfriend , …. but I will miss many opportunity
cost
b. Skipping your next economics class meeting.
My oppoturnity cost if I skipping increase my knowlegde of economics , forgone tuition
fee
c. Taking an all expenses paid trip to the Lasvegas for a week during this semester.
If I taking all expenses paid trip to lasvegas , maybe I will excited to that , but when I
boring ,maybe I can go to casino from here , then I loss all my money . But if I don’t go , I
stay at home , do my job , go to university , got knowledge , take many money ,….
2. The local pizza restaurant is advertising a special. If you buy one individual sized pizza,
you get the next one at 25% off, the third one for 50% off and the fourth one for 75% off.
Your marginal benefit from eating pizza is shown in the table below. If the price of a pizza
is $6, how many should you buy? (3 points)
No of pizzas MB (Marginal Benefit)
0 0
1 7
2 4
3 2
4 1
No of pizzas MB MC
0 0 0
1 7 6
2 4 4,5
3 2 3
4 1 1,5
I should buy 1 pizza because MB’s first pizza >Mc , from the second pizza mb < mc
3. The workers in a factory currently earn $120 for a 39 – hour week. The management
offers them a choice between either a straight 10% wage increase or an increase in the
weekly wage to $125 coupled with a reduction in hours from 39 to 37 hours. What is the
opportunity cost to each worker of opting for the 37 – hour week?
Option 1 :
Salary : 120* 110%=132
Hours : 39
Salary per hours : 132/39 =3,38 ($)
Option 2
Salary :125
Hours : 37
Salary per hours : 125/37 =3,38($)
The opportunity cost to each worker of opting for option 2 is 7$ per 1 week because option
1 - option 2 = 7$ but they got 2 hours for relax or go healing ,the salary per 1 hours is equal
so I got many than lossing
Option 1 will earn more money than option 2. Therefore, the opportunity cost to
eachworker of opting for the 37 – hour week is $132 for a 39-hour week
Question 2. (5 points)
1. a. What is defined as absolute advantage?
Absolut advantage is the ability to produce a good using fewer inputs than another
producer
b. What is defined as comparative advantage?
Comparative advantage is the ability to produce a good at a lower opportunity cost
than another producer
c. Case 1: Output approach
Two commodities and two countries
Given the resources, Singapore and Malaysia can produce the following products –
television sets and cars (see Table 01)
Countries TV sets Cars (units)
Singapore 100 50
Malaysia 60 40
Table 01
+ Which country has the absolute advantage in the production of both TV sets and
Cars over the other?
Singapore has the absolute advantage in the production of both TV sets and cars.
Because Singapore can produce more both TV sets and cars than Malaysia, with
100 TV sets and 50 cars compared to 60 TV sets and 40 cars of Malaysia.
+ Which country has the comparative advantage either in the production of TV sets
or in the production of Cars over the other? Draw your PPF to illustrate
- Singapore has a comparative advantage in TV sets because:
+ The opportunity cost of 1 TV sets in Singapore is 0,5 cars.
+ The opportunity cost of 1 TV sets Malaysia is 0.67 cars.
- Malaysia has a comparative advantage in cars because:
+ The opportunity cost of 1 cars in Singapore is 2 TV sets.
+ The opportunity cost of 1 cars in Malaysia is 1.5 TV set
d. Case 2: Input approach
Two commodities and two countries
Give the resources, America and England can produce one unit for both Steel and
Coal in terms of number of working hours shown as follows:
Countries One unit of Steel One unit of Coal
required required
America 80 man-hours 90 man-hours
England 120 man-hours 100 man-hours
Table 02
Opportunities cost of Steel in America: 0,89
Opportunity cost of Steel in England: 1,2
Opportunity cost of Coal in America: 1,13
Opportunity cost of Coal in England: 0,83
+ Which country should specialize in the production of Steel? Explain your
answer
America has the comparative advantage in production of Steel so America should
specialize in the production of Steel
+ Which country should specialize in the production of Coal? Explain your
answer
England has the comparative advantage in production of Coal so England should
specialize in the production of Coal
e. Case 3: Input approach
Two countries but multiple commodities
The following Table 03 shows the numbers of man – days taken to produce an
equivalent amount of six commodities in each of the two countries – Switzerland
and Sweden.
Countries Coal Cotton Wool Iron Wheat Maize
Switzerland 120 60 70 100 140 80
Sweden 100 25 35 90 90 20
Table 03
+ Assuming that there are no other costs of production. Which two commodities is
Sweden most likely to import from Switzerland? Calculate, Draw your PPF and
Explain
If do not mention the cost of the production , I see that sweden is need mch the
numbers of man-days to produce , most about coal , iron , wheat . Sweden will need
ti import coal and iron from switzerland
Coal cost most of oppoturnity cost fow sweden to produce , so this product will be
the most for this country
Iron in switzerland has less oppoturnity cost than wheat so switzerland produce
more iron , that is the chance for sweden to import the product cost more
oppoturnity cost
