Question

Max is taking two courses this semester Math and Economics. She has 10 hours to study and has a mid-term for each class coming up. Both tests are over 100 points. Suppose that if she goes to the Math or Econ tests without studying at all she will get a 0. For every hour that Max studies for the math mid-term her grade goes up by 8 points and for every hour she studies for econ mid-term, her grade goes up by 10 points.

a) Make a diagram with points on math mid-term on vertical axis and points on econ mid-term in the horizontal axis. In your diagram show what combination of points in both mid-terms are possible for Max and which ones are unattainable. Make sure to carefully label your graph (axis, curves, etc...)

b) What is the Opportunity cost for Max of studying one more hour for the econ test?

c) Suppose that in order to pass the math mid-term you need at least a 56 and to pass the econ mid-term you need at least a 60. Can she pass both classes? How many hours of study does Max need to study pass both tests? Explain.

d) Max's study friend is John. For every hour John spends on studying Econ his grade goes up by 6 points and for every hour studying math his grade goes up by 2 points. Who has a comparative advantage in studying for math Max or John? Explain.

e)  Do you think the principle of comparative advantage applies to this example? Why?

Answer 1

• First of all according to the question we make a table

• Now using the table, let's draw the graph

a) all the points lying 'on' the line cd and 'below' this are attainable and points lying above the line cd are not attainable eg (30,64), (60,48), (60,56) ..and so on

b)opportunity cost of studying economics = how much marks you have to give up to get one more marks in economics = 8/10 = 0.8

c)

• 56 marks in maths --> 7hrs and 60 marks in economics -->6 hrs . Now 6+7 =13hrs. But in total we have only 10 hrs. So it's not attainable
• In the graph also, we can see this point (60,56) lies above our constraint line cd
• So student need 13hrs for passing

d)

• opportunity cost of math for Max = 10/8 = 1.25
• Opportunity cost of math for John = 6/2 =3
• Thus Max has comparitive advantage for studying math

e)Although there is no relative advantage for studying maths for both John and Max but as we see above Max has comparitive advantage in studying maths

But it is of no relevance here because the students can't trade their marks and one student can't study for another.