##### Question

# (#1) Three friends, Joe, John and Jack, establish a firm JJJ that makes gadgets and tutor economics students

(#1) Three friends, Joe, John and Jack, establish a firm JJJ that makes gadgets and tutor economics students. If they all work, in one hour they can produce the following combinations of economics tutorials (ET) and gadgets (G): (0,30), (1,24), (2,14) and (3,0).

A. Compute the opportunity cost of a gadget, when 0, 1 and 2 tutorials are produced.

B. C. What could explain the increase in the opportunity cost when more gadgets are produced?

(#2) One unit of labour can produce either 2 units of x or 1 units of y. One unit of capital can produce either 4 units of x or 1 unit of y. There are 100 units of each means of production. Just one means of production is needed for the production of either x or y.

A. The opportunity cost of producing x equals 2 units of y.

B. The opportunity cost of producing x equals 0.25 unit of y.

C. The opportunity cost of producing x equals 4 units of y.

D. The opportunity cost of producing x will be 0.25 unit of y whenever we produce less than 400 units of x and 0.5 units of y whenever we produce more than 400 units of x.

E. The opportunity cost of producing y will be 0.25 unit of x whenever we produce less than 400 units of y and 4 units of x whenever we produce more than 400 units of y.

F. None of the above.