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Announcement. Clicker company has promised full refunds on clickers returned to bookstore by a week from today. Bookstore says any time except Saturday This batch of clickers has a bad chip that causes batteries to leak slowly while in “sleep mode”.
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Announcement Clicker company has promised full refunds on clickers returned to bookstore by a week from today. Bookstore says any time except Saturday This batch of clickers has a bad chip that causes batteries to leak slowly while in “sleep mode”
I think that using clickers in class and giving credit for attendance is a good idea. • Strongly Agree • Agree • Neutral • Disagree • Strongly Disagree
Farmers Alf and Barney can plant wheat or hay. Alf’s land yields 60 bushels of wheat per acre and Barney’s yields 30. Alf’s land yields 3 tons of hay per acre and Barney’s yields 2 • Alf has comparative advantage in both crops. • Barney has comparative advantage in hay. • Barney has comparative advantage in wheat.
Why is that? • The ratio of Alf’s productivity in hay to his productivity in wheat is • 3 tons/ 60 bushels =1/20 tons/bushel • The ratio of Barney’s productivity in hay to his productivity in wheat is • 2 tons/30 bushels=1/15 tons/bushel • 1/15>1/20 so Barney has comparative advantage in hay.
Alf has 100 acres. He can get 60 bushels of wheat per acre or 3 tons of wheat per acre. The following equation shows the combinations of bushels of wheat (W) and tons of hay (H) that he can grow on his farm. • 60W+3H=100 • (W/60)+(H/3)=100 • 3W=60H • 60W=3H
Why is that? • He gets 60 bushels of wheat from every acre planted in wheat and three tons of hay from every acre in hay. • To get W bushels of wheat he needs to plant W/60 acres in wheat. To get H tons of hay, he needs to plant H/3 acres in hay. • He has 100 acres to plant in one or the other so he can choose any combination where (W/60)+(H/3)=100.
The ratio of productivity in hay to productivity in wheat for Alf is 1/20 ton per bushel, and for Barney it is 1/15 ton per bushel. The price of wheat is $1 per bushel. If the price of hay is $18 per ton • Alf will specialize in wheat and Barney in hay. • Both will produce wheat. • Both will produce hay. • Alf will specialize in hay and Barney in wheat.
Why is that? • By switching his cropland from hay to wheat, Alf gets 20 bushels of wheat for every ton of hay he gives up. 20 bushels of wheat are worth $20. A ton of hay is worth $18. • By switching cropland from wheat to hay, `Barney gets 1 ton of hay for every 15 bushels of wheat that he gives up. 15 bushels of wheat are worth $15. A ton of hay is worth $20.
. Alf’s Options Gold line shows production possibilities. 1 ton of hay “costs” 20 bushels of wheat. 6000 bushels Pink line shows combinations Attainable by specializing in wheat And trading at price $18 per ton for Hay and $1 per ton for wheat. . 5400 bushels Dotted pink line shows Combinations available to Alf If he specializes in Hay. (Bad Choice) H 333.3 300 tons
.. Barney’s Options W 3600 The green line shows combinations of Hay and wheat that Barney could produce On his 100 acre farm. 3000 bushels The pink line shows combinations he Could obtain by specializing in hay And trading at “world price” of $18/per Ton of hay, $1 per bushel of wheat. Dotted pink line shows combos Available by specializing in wheat (Bad idea) H 200 tons
Final Exam • Last Name starts with A-B or Y-Z go to Buchanan 1940 • Last Name starts with C go to South Hall 1431. • Others (D-X) go to Campbell Hall • No cell phones, or electronic communicating devices. • Bring ID, scantron, pencil.
