Homework 1 – due Wednesday, January 27, 2021 before class

Please submit via HuskyCT -- one point for successful submission

1. Read “Treating children for worms yields long-term benefits, says new study” available on HuskyCT and
here: https://news.berkeley.edu/2020/08/03/treating-children-for-worms-yields-long-term-benefits-says-new-
study/?utm_source=EX&utm_medium=News&utm_campaign=MRUEmail&utm_content=treating-children-
for-worms-yields-long-term-benefits-says-new-study&__s=qqwow9f4gfx35cqvwyvc

Answer the following questions based on the article referenced above (10 points)

a. What is the cost per year per child of an extra year of deworming treatment?
b. What are some of the benefits of deworming treatment? (Quote some of the numbers from towards the
end of the article.)
c. How might this study be related to the current COVID-19 pandemic?
d. What percentage of the world’s population – and how many people – are infected with parasitic worms?
e. Is climate change likely to make this problem better or worse? How?

2. By reference events in the news, something from your personal experiences, or something you've read, seen
on television, or seen in a movie (fiction or nonfiction), or something you've seen on line, describe one example
of each of the principles of individual choice. (8 points)
a. People must make choices because resources are scarce.
b. The real cost of something is what you must give up to get it (the opportunity cost).
c. ``How much?'' is a decision at the margin: comparing the costs and benefits of doing a little bit more of
an activity versus doing a little bit less. Rational people think at the margin.
d. People usually respond to incentives, exploiting opportunities to make themselves better off.

3. (8 points)

a. In the world before COVID, you were planning to spend Saturday working on your part-time job, but a
friend asks you to go to New York City to see if Carnegie Hall is near Central Park. What is the true cost of
going to New York?

b. Now suppose you had been planning to spend the day working on your economics homework. What is
the cost of going to New York now?

Economics 1201 Spring 2021 – Homework 1 – Due January 27, 2021 1

4. (8 points) In each of the following cases, explain whether you think the situation is efficient or not. If it is not
efficient, why not? What actions would make the situation efficient?
a. Electricity is included in the rent in your apartment. Some residents in your building leave lights, computers,
and appliances on when they are not home.
b. The enrollment for a particular course exceeds the spaces available. Some students who need to take this
course to complete their major are unable to get a space even though others who are taking it as an elective do
get a space.

5. Watch “Opportunity Cost” https://youtu.be/x-hYzRncxTc (6 points)

a. What is Bob’s opportunity cost of 1 Fish?

b. What is Ann’s opportunity cost of 1 Fish?
c. Who should specialize in catching Fish – Bob or Ann?

6. Consider a country that has the following five production options. (15 points)

Options Milk (Millions of Cars (# of

Gallons) Cars)
1 20 0
2 18 15,000
3 14 30,000
4 8 45,000
5 0 60,000

a. Which line (A B or C) represents the Production Possibilities frontier based on the table.
b. What is the opportunity cost of increasing car production from 15,000 to 30,000? (answer is not in $)
c. What is the opportunity cost of increasing car production from 45,000 to 60,000? (answer is not in $)

Economics 1201 Spring 2021 – Homework 1 – Due January 27, 2021 2

7. Wakanda and Turkana both produce vibranium and petroleum. Wakanda has 1,000 workers. In one
year, each worker is able to produce 10 tons of vibranium or 15 barrels of petroleum. Turkana is a somewhat
smaller nation with 800 workers. Each worker is able to produce 6 tons of vibranium or 12 barrels of petroleum
in a year. Below are the production possibilities curves for the two countries. (16 points)

a. Are opportunity costs increasing, decreasing or constant? _________________

b. What is the opportunity cost of 1 ton of vibranium in Wakanda? _______

c. What is the opportunity cost of 1 ton of vibranium in Turkana? ________

d. What is the opportunity cost of 1 barrel of petroleum in Wakanda? _______

e. What is the opportunity cost of 1 barrel of petroleum in Turkana? _________

f. Which country has the ABSOLUTE advantage in vibranium? _______

g. Which country has the ABSOLUTE advantage in petroleum? ___________

h. Which country has the COMPARATIVE advantage in vibranium? _________

i. Which country has the COMPARATIVE advantage in petroleum? _______________

j. Should the countries trade? ____________________________ If you answer no, stop here.

k. If you answer yes, which country should specialize in vibranium? __________

l. If you answer yes, which country should specialize in petroleum? __________

m. What is a range of petroleum prices that would benefit both countries? (Note the price is not in dollars
or money.) ________________________

Economics 1201 Spring 2021 – Homework 1 – Due January 27, 2021 3

8. Patrick loves appetizers The price of an order of wings is $3 and the price of an order of skins is $2.
Patrick has $18 to spend on wings and skins. (8 points)

a. What is the maximum number of wings Patrick can buy?

b. What is the maximum number of skins Patrick can buy?
c. What is the opportunity cost of an order of skins?
d. What is the opportunity cost of an order of wings?

9. Select an article regarding any MICROeconomic-related topic from www.wsj.com (any date) or The Wall
Street Journal. Write down the name of the article, the author, and date that the article was published or include
the link in your homework. Write one sentence as to why you consider this to be related to MICROeconomics.
(10 points)

10. Select an article regarding any MACROeconomic-related topic from www.wsj.com (any date) or The Wall
Street Journal. Write down the name of the article, the author, and date that the article was published or include
the link in your homework. Write one sentence as to why you consider this to be related to MACROeconomics.
(10 points)

Economics 1201 Spring 2021 – Homework 1 – Due January 27, 2021 4