Key to Test 1 Study Problems (Corrected)

Here is the key to the study problems for the first test. A copy of the problems is available from my I-drive.

1-C, 2-A, 3-C, 4-D, 5-A, 6-C, 7-B*, 8-C,
9-B, 10-B, 11-A, 12-B, 13-C, 14-B, 15-B,
16-A, 17-B, 18-A, 19-A, 20-B, 21-A,
22-D, 23-B, 24-B, 25-D*, 26-B, 27-B, 28-D,
29-C, 30-C, 31-C, 32-B, 33-C, 34-C

If you got any of these wrong you should try to figure out why. If you really think one of my answers is wrong, let me know. (I may be wrong. It's happened before.)

*Corrections:

Problem 7. Originally listed as C. Correct response is obviously B. (Thank you Christine Adams for point out this error.)

Problem 25 originally reported alternative A as the answer (complementary goods). If the price of good X falls leading to less Y sold, that means people are buying more X and less Y. They are substitutes. (Thanks to Tim McCracken for bringing that to my attention.)

Honestly, I'll be much more careful with the key for the test. (I usually have a check mechanism in place for tests.)

One problem many of you will find challenging is number 20. To answer this please be aware of what you need to compare:

Initially, they are producing at points A on their PPFs.
When they trade, you must figure out how much of the good (in which they have the comparative advantage) is produced under complete specialization. Then make the trade as indicated in the problem. You can call this point B and plot it on their diagrams if you want. Finally, figure out how extra of one or the other (or both) goods they have after this trade compared to point A.

Watch this space for any changes, updates, or other important communications.

I will be available in my office on Thursday (9/22) 10:30-noon and 1:00-3:00 p.m.

Good luck.