QUESTION 10 Hans can do 4 loads of laundry per hour, and he can type 6 pages per

Question

QUESTION 10 Hans can do 4 loads of laundry per hour, and he can type 6 pages per hour. Maria can do 12 loads of laundry per hour, and she can type 8 pages per hour. Hans and Maria would both be better off if. a. Hans did all of the typing and all of the laundry b. Hans specialized in doing laundry and Maria in typing, trading with each other for the other service. , c. Maria did all ofthe typing and all of the laundry. d. each did their own laundry and typing. e. Hans specialized in typing and Maria in doing laundry, trading with each other for the other service. QUESTION 11 If the consumer price index (CPI) is 220 one year and 210 the next, the annual rate of inflation as measured by the CPI is approximately a. 220 percent c.-4.6 percent d.-2.3 percent e 10 percent QUESTION 12 Uncertainty about inflation: a reduces the difficulty of making Ob. makes contracts easier to negotiate. c. make suppliers link the selling prices of their goods to the overall inflation rate. D d shifts the attention of business managers away from exchange rate movements and toward concerns about as a link between the present and the future. to save al Save and

Explanation / Answer

10. For Hans

Opportunity cost of doing 1 load of laundry = 6/4 = 1.5 pages per hour

Opportunity cost of writing 1 page = 4/6 = 0.67 load of laundry per hour

For Maria

Opportunity cost of doing 1 load of laundry = 8/12 = 0.67 pages per hour

Opportunity cost of writing 1 page = 12/8 = 1.5 loads of laundry per hour

Hans should specialize in typing and Maria should specialize in the laundry. The reason being, the opportunity cost of typing is less for Hans than that for Maria and Opportunity cost of doing Laundry is less for Maria than that for Hans.

11. Annual rate of inflation = ((CPI2 - CPI1) / CPI1 )*100 = ((210 - 220)/220)*100 = -4.6 percent

OPTION C

12. OPTION C

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