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September 09, 2025, 07:38:19 am

Author Topic: economics exam .. 24 hours left!  (Read 4434 times)  Share 

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marbs

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Re: economics exam .. 24 hours left!
« Reply #15 on: November 06, 2008, 09:18:03 pm »
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yep... i thought it was a bit different

cobby

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Re: economics exam .. 24 hours left!
« Reply #16 on: November 07, 2008, 09:10:42 am »
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interesting multiple choice question;

When compared with country A people in country B are twice as productive at producing computers and three times as productive at producing cars. According to the theory of comparative advantage:

A) Country B will be unable to sell either computers or cars to country A

B) Country B will sell computers to country A and buy cars from country A

C) Country B will sell both computers and cars to country A

D) Country B will sell cars to country A and buy computers from country A.


(this is one I made a mistake on)

is this question from one of the A+ tests?
it looks familiar, got me stumped aswell
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marbs

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Re: economics exam .. 24 hours left!
« Reply #17 on: November 07, 2008, 09:19:01 am »
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yeh they're actually pretty good.

Might do a couple more before exam today

Collin Li

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Re: economics exam .. 24 hours left!
« Reply #18 on: November 07, 2008, 12:59:47 pm »
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The way you do it is you use one country's production schedule as a reference (country A is the easiest), and realise the opportunity costs.

In country A: 1 car = 1 computer (reference market)

In country B:
- producing 1 car would come at the opportunity cost of 2/3 of a computer.
- producing 1 computer would come at the opportunity cost of 3/2 of a car.

Since 1 car is worth 1 computer, clearly country B should produce cars, where the opportunity cost is less than the benefit (1 car vs. 0.667 computers = 0.667 cars).

On the other hand, country B would not make computers, because it would cost them 1.5 computers to produce 1.

You can use country B as the reference market instead, to see what country A would produce, and it should just be the other way around (should find computers more profitable).



I'll run through the example I guess:

In country B: 3 cars = 2 computers (reference market)

In country A:
- producing 1 car would come at the opportunity cost of 1 computer.
- producing 1 computer would come at the opportunity cost of 1 car.

Since 1 car is worth 1 computer, which is worth 3/2 cars (purchased from country B), country A would not produce cars, because it costs them 1.5 to produce 1.

On the other hand, country A would make computers, because it would cost them 1 car (worth 2/3 computers from country B), so the opportunity cost is less than the produce.

It shouldn't really take this long in an exam. This is sort of walking through the steps and methodology. Some people can just work it out in their heads, because it is a bit intuitive. The best anecdotal way to understand comparative advantages is via the "lawyer and his son mowing the lawn" example. The lawyer (older and more experienced) may be a better mower, but since his son is clearly much worse at law than he is at mowing, the son shall do the mowing while the lawyer practices law.
« Last Edit: November 07, 2008, 01:04:02 pm by coblin »

marbs

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Re: economics exam .. 24 hours left!
« Reply #19 on: November 07, 2008, 01:04:43 pm »
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could you use fuel watch for a reform affecting competition?

Collin Li

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Re: economics exam .. 24 hours left!
« Reply #20 on: November 07, 2008, 01:17:54 pm »
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could you use fuel watch for a reform affecting competition?

Yes, I mean, that's certainly its intention. Whether it is effective or not is a different matter.

marbs

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Re: economics exam .. 24 hours left!
« Reply #21 on: November 07, 2008, 01:33:16 pm »
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could you use fuel watch for a reform affecting competition?

Yes, I mean, that's certainly its intention. Whether it is effective or not is a different matter.

cheers.. yeh I'll probably try and fit it in as a recent reform

AppleXY

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Re: economics exam .. 24 hours left!
« Reply #22 on: November 07, 2008, 01:35:10 pm »
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Hey guys.

What do you think the 8-10mark question will be?

and one other question, do you need to learn the 10-year trend. Because if we do, im fucked lol

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marbs

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Re: economics exam .. 24 hours left!
« Reply #23 on: November 07, 2008, 01:38:11 pm »
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Hey guys.

What do you think the 8-10mark question will be?

and one other question, do you need to learn the 10-year trend. Because if we do, im fucked lol

i'm thinking skills shortage... probably not right