What is the opportunity cost of an increase in income

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Reference no: EM13219119

1. The following numbers measure the tradeoff between grades and income:

Total Hours/Hours Studying/GPA/Hours Working/Income

60 60 4.0 0 $0

60 40 3.0 20 $100

60 30 2.0 30 $150

60 10 1.0 50 $250

60 0 0.0 60 $300

a. Calculate the opportunity cost of an increase in the number of hours spent studying in order to earn a 3.0 grade point average (GPA) rather than a 2.0 GPA.

b. Is the opportunity cost the same for a move from a 0.0 GPA to a 1.0 GPA as it is for a move from a 1.0 GPA to a 2.0 GPA?

c. What is the opportunity cost of an increase in income from $100 to $150?

2. Suppose a second individual has the following tradeoffs between income and grades:

TotalHours/Hours Studying/GPA/Hours Working/Income

60 50 4.0 10 $60

60 40 3.0 20 $120

60 20 2.0 40 $240

60 10 1.0 50 $300

60 0 0.0 60 $360

a. Define comparative advantage.

b. Does either individual (the one in exercise 4 or the one in exercise 5) have a comparative advantage in both activities?

c. Who should specialize in studying and who should specialize in working?

Reference no: EM13219119

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