Question

Walter White can make a batch of meth in 4 hours and distribute a batch of meth in 8 hours, and Jesse Pinkman can make a batch of meth in 6 hours and distribute it in 10 hours. Would Walter have the comparative advantage over Jesse in making and distributing meth?

A. Yes, Walter has a comparative advantage over Jesse in making and distributing meth.
B.		No, Jesse has a comparative advantage over Walter in making and distributing meth.
C.		No, because no person can have a comparative advantage in both goods.
D		There is not enough information to answer this question.

2. The tax burden is not at all affected by the market’s elasticity. True or False

3.

Which of the following products is considered an inelastic good?

		Insulin for a Diabetic Individual
		Candy
		Vacations
		Season Tickets to the Baltimore Ravens football games.

Answer 1

Answer: to calculate comparative adavantage you have to calculate the opportunity cost of each goods and services , here not enough information is given so that we can calculate the comparative cost advantage . so the answer will be ( D ) that is there is not enough information to answer this question.

2-

Answer: FALSE

tax incidence is depends on the elasticity of supply and demand . if supply is more elastic and demand is less elastic than the whole burden of tax will be on buyers , and if demand is more elastic and supply is less elastic than the burden will be on suppliers . so tax burden is affected by market elasticity .

3- Inelastic means that when price changes than quantity demanded remain unchange or there will be very little change in quantity demanded . so answer will be ( Insulin for a diabetic individual ) is a inelastic good because if price increases than there will be no change in quantity demanded .

on the other hand vacation is a luxury good and luxury good have more elasticity .

candy have more elastic demand that is if price of candy increases than people will demand more and if price decreases than people will demand less of it.

season tickets have more elaticity , as price of tickets increases than people will purchase less of it and if price decreases than people will purchase more.  

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