jude andrew Posts: 1, Reputation: 1 New Member #1 Oct 29, 2008, 06:54 AM
opportunity cost
1. Which of the following is an opportunity cost of the activity in question and which is not? – Explain.
[Each correct answer: 2 marks, each correct explanation 2 marks. Total 4 marks each. If the explanation is inconsistent with the answer: 0 mark]

a. A person decides spend all her time as a full time student. To do this, she has to quit her job, in which she earned £20,000 a year. – opportunity cost = £ 20,000 a year

b. Bill Gates realises he has a flat tyre and decides to spend one hour in changing it in order to save the £10 that the expert in flat tyres would have charged for the same job – opportunity cost = 0, he does not pay anything for changing the tyre.

c. A boy has just had dinner with his beautiful girlfriend in her house. She has a dishwasher, but the boy insists in washing the dishes. – Opportunity cost = the detergent he uses for washing the dishes.

d. A country decides to subsidise the production of sugar. In order to get money for that subsidy, they cut the health budget in £100 million – Opportunity cost = the sum of the alternative things they could have been able to do with the £100 million.

2. Which of the following data sets would be a time series and which of the following would relate to a cross section?

a. Average of households’ expenditure for the UK, annually from 1990 to 2005.
b. Unemployment rate in 2004, for all European countries.
c. Households’ expenditure in health services in India in urban areas in 2004.
d. Monthly price index for wheat in 2003.
e. The maximum of firms’ per year expenditure on Research and Development in Morocco from 2000 to 2006.
 ebaines Posts: 12,130, Reputation: 1307 Expert #2 Oct 29, 2008, 07:10 AM

Jude: We're not going to do your homework for you. I suggest you tell us what you think the answers are and why, and then I'm sure someone will help you out.

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