Questions of the Day
Opportunity Cost

1. Assume that you are the advisor to a friend from Massachusetts who is considering enrolling at URI next year. As an input into her decision, your friend has asked you to determine for her the cost of a year's education at URI for an out-of-state student. To help her out, please specify the cost of a year at URI for an out-of-state-student.

2. Why have we seen an influx of middle age students into colleges and universities?

3. What impact would you expect the continued downsizing of corporate America to have on the age composition of university students?  What is the basis for your answer?

4. Universities, like most businesses, are continually on the lookout for new products. One of the more popular graduate programs is the MBA, Masters of Business Administration - a program that appeals to a wide array of individuals ranging from recent college graduates who want an improve their chances of a successful entry into the business community to mid career executives looking for an MBA to further their advancement within the community. Traditionally, MBA programs have been either a two-year, full-time program or a part-time, evening program extending over many years. Neither has been particularly successful at tapping the potentially large market for mid-career executives. As a consultant to the University, you have been asked to design a 'new' MBA program that would simultaneously reduce substantially the cost of an MBA degree for mid-career executives and raise the tuition rate that the university could charge. Stated somewhat differently, could you design a program where the university could charge a higher tuition rate, but where the students would correctly perceive the new rate as being lower.

5. Economics has been called the extension of war. What is your view on this statement and how is it related to Paul Kennedy's concept of "imperial overstretch?"

6. Helio-Plastics has recently entered the market for hula hoops. Actually, they are attempting to create the market among younger people since there are very few individuals who remember hula hoops who can still use them. The decision has been made to spend $120,000 on the initial advertising blitz (they are clearly not talking Super Bowl TV time). The current price of a print add is $100 and the current price of a radio add is $150.

• Draw the advertising possibility curve for the company. The output is the number of adds.
• What happens to the PP curve if the price of a print add increases to $150.

7.  What's the deal - or is there a deal?  There are two countries (A and B) that both produce wine (W) and cloth (C) (we are trying to make this simple).  The production of wine and cloth in the two countries can be represented by the following production function relating the weeks of labor (L) and the units of output.

• Country A
  one week of labor can produce 100 yards of cloth
  one week of labor can produce 50 bottles of wine

• Country B
  one week of labor can produce 20 yards of cloth
  one week of labor can produce 40 bottles of wine

a. If you assume that each country has 50 weeks of labor, what are the production possibility curves for the two countries? [The best way to do this is set up the possibility diagram with the axes measuring the two outputs (W,C).  Then you should determine the two intercepts where the countries would specialize in the two products and then join the two points].

b. Which country is more productive in producing wine?  in producing cloth?  Do you see any advantages to trading between the two countries?  What trade "deal" would you propose?