Who has a comparative advantage in washing a car? In sweeping the floor?
(4) Dave has a comparative advantage in washing a car; Tom has a comparative advantage in sweeping the floor. 2 Read the following news headlines and interpret them in terms of supply and demand: (a) “Digital Camera Prices Fall as More People Buy, Contradicting Law of Supply and Demand” (2) (b) “Crude Oil, Petroleum Product prices Rise after Explosion at Large Shell Refinery…” (2) (a) supply increases (b) supply decreases 3. What happens to the demand for a good if the price of a complement for it rises? (2) it decreases 4. If a 20 percent rise in the price of Frisbees reduces the quantity of Frisbees demanded by 10 percent, what is the elasticity of demand for Frisbees? (2) the elasticity equals 1/2. 5. Your company’s marketing department estimates that the elasticity of demand for your company’s product is 1/2. What happens to the quantity sold and total revenue if you raise the price by 5%? (2) The quantity sold falls by 2.5%, and total revenue rises. 6. Suppose the government rai
