ECON6049 - Anna and John Case Study - Economics Assignment

Read section 1.1 of the textbook.
Use the provided spreadsheet (presenting the data used to create Figure 1.2 from the textbook). Consider Australia, China, USA and another two countries of your choice.
1. For each country calculate the 90/10 ratio in 1980, 1990 and 2014.
2. Describe the differences between countries and the changes over time that you find.
3. Can you think of any explanations for the differences you find? 

Question 2 
1. Identify any two social dilemmas associated with the situation around COVID-19. 
2. For each one, specify how it satisfies the definition of a social dilemma. 
3. Can you suggest the ways to resolve these social dilemmas? 
4. Can you represent one of the dilemmas as a game (in table form)?

Question 3
Assume that Anna and John can grow pears and bananas and have the same working time. If John spends all his working time on growing one fruit, he can produce 100kg of pears or 50kg of bananas. If Anna spends all her working time on growing one fruit, she can produce 70kg of pears or 70kg of bananas.
1. Explain a difference between the absolute advantage and comparative advantage in producing pears. 
2. Who has an absolute advantage in producing pears, bananas? Who has a comparative advantage in producing pears, bananas? 
3. Should Anna and John specialise? Explain. 
4. Is it possible to change the numbers so that John has an absolute advantage in producing both goods? Explain. If the answer is yes, give an example. 
5. Is it possible to change the numbers so that John has comparative advantage in producing both goods? Explain. If the answer is yes, give an example.

Question 4
Think of any two jobs with which you are familiar (for example, a teacher, a retail worker, a nurse, or a police officer). In each case, indicate why the employment contract is necessarily incomplete. What important parts of the person’s job—things that the employer would like to see the employee do or not do—cannot be covered in a contract, or if they are, cannot be enforced?

Question 5(ECON6049)
Imagine that you are offered a job at the end of your university course with a salary per hour (after taxes) of $15. Your future employer then says that you will work for 40 hours per week leaving you with 128 hours of free time per week. You tell a friend: ‘at that wage, 40 hours is exactly what I would like.’
1. Draw a diagram with free time on the horizontal axis and weekly pay on the vertical axis, and plot the combination of hours and the wage corresponding to your job offer, calling it A.  Assume you need about 10 hours a day for sleeping and eating, so you may want to draw the horizontal axis with 70 hours at the origin.
2. Now draw an indifference curve so that A represents the hours you would have chosenyourself.
3. Now imagine you were offered another job requiring 45 hours of work per week. Use the indifference curve you have drawn to estimate the level of weekly pay that would make you indifferent between this and the original offer. 
4. Do the same for another job requiring 35 hours of work per week. What level of weekly pay would make you indifferent between this and the original offer?
5. Use your diagram to estimate your marginal rate of substitution between pay and free time at A. 

Question 6
Imagine that you are a politician in a town where a multinational retailer is planning to build a new superstore. A local campaign is protesting that it will drive small independent retailers out of business, and thereby reduce consumer choice and change the character of the area. Supporters of the plan argue in turn that this will only happen if consumers prefer the supermarket. Which side are you on?
 

Question 7
Consider the following table from Unit 7 of the textbook. It shows the spending per week in each category of a US consumer whose total expenditure on food is $80, with typical spending patterns across food categories.