chp3 quiz

Advances in wireless communication technology reduce the​ non-financial costs of long​ commutes: People who ride trains can get work​ done, and people who drive cars have more entertainment options. _Given this​ information, which of the following will be an effect on the geographic area of​ cities? How will this result impact people as they decide how close to live to the city where they​ work?

-The total cost of commuting from any given distance to work will reduce because the indirect cost of the commute will fall. they will be more willing to locate farther from the city .

You have the option to play tennis or a round of golf​ (but not​ both). The tennis match requires you to take 2 hours off from work and the round of golf requires you to take 4 hours off from work. Playing tennis has value to you equal to ​$50​, while golf has value to you equal to ​$95. Tennis courts are publicly available at no​ cost, but golf costs ​$50 per round. Suppose your wage from working is ​$10 per hour.

The net benefit from playing tennis is ​$ 30 and the net benefit from playing golf is ​$ 5. ​ ​Therefore, you should play tennis

In which of the following​ cases, will the profit of the firm be​ maximized?

When the marginal cost of producing an additional unit equals the marginal revenue from that unit. The​ profit-maximizing level of output is 4 units.

When optimizing for total​ value, opportunity cost must be___ total cost Assuming__ benefits , the lowest cost option is the optimal choice

added to equal

If opportunity cost were to suddenly​ increase, total cost would

increase and net benefit would decrease.

You are hired as a consultant for a local restaurant. It is considering whether to close at​ 9:00 p.m., stay open an extra hour​ (10:00 p.m.), or close earlier​ (8:00 p.m.). Based on wages and utility​ bills, the added cost​ (the marginal​ cost) of staying open for each additional hour is ​$354.

If the additional revenue​ (the marginal​ revenue) during the last hour is ​$394​, the profit earned during the last hour of operation will be​ $ 40 If the additional revenue during the last hour is ​$294​, the profit earned during the last hour of operation will be​ $ negative 60. If the additional revenue​ (the marginal​ revenue) from staying open until 10.00 p.m. is ​$354​, the profit earned during the last hour of operation will be​ $ 0

Suppose your firm has a marginal revenue given by the equation MR equals 10 minus Upper Q​, where Q is the quantity produced and sold. This means that the seventh unit of output brings in 10 minus 7 equals $ 3 of additional revenue. The marginal cost for your firm is given by the equation MC equals 2 plus Upper Q. This means that the seventh unit of output increases the marginal cost by 2 plus 7 equals $ 9.

If the firm produces the seventh unit of​ output, marginal cost will be GREATER THAN marginal revenue

Assume that the average price for a​ 2,000-square-foot house in the city is ​$390000 and the average rent for a​ 2,000-square-foot apartment in the city is ​$1300 per month. Also assume that the average price for a​ 2,000-square-foot house in the suburbs is ​$250000​, the average price for a​ 2,000-square-foot house in the county is ​$363333​, and the average price for a​ 3,000-square-foot house in the suburbs is ​$450000.

Using comparative statics and the information​ above, what is the best estimate of the effect of living in the city​ (relative to living in the​ suburbs) on home​ prices? Living in the city changes home prices by ​$ 140000

For​ simplicity, assume rent and the opportunity cost of your time commuting to work are the only factors influencing the location in which to rent an apartment. .Suppose you currently rent an apartment in Location Upper C

You should rent an apartment in Location A By moving to​ optimize, you change your net benefit by ​$ 78

For​ simplicity, assume rent and the opportunity cost of your time commuting to work are the only factors influencing the location in which to rent an apartment. Suppose you currently rent an apartment in Location Upper B.

You should rent an apartment in Location D By moving to​ optimize, you change your net benefit by ​$ 50. ​(

Suppose apartments are in four​ locations: Location​ A, Location​ B, Location​ C, and Location D. Location A is in the​ city, where your job is. Location B is 10 minutes farther from your job than Location A. Location C is 10 minutes farther from your job than Location​ B, and Location D is 10 minutes farther than Location C. In​ turn, similar apartments in Location B rent for ​$115 less per month than apartments in Location​ A, apartments in Location C rent for ​$115 less than in Location​ B, and apartments in Location D rent for ​$115 less than in Location C. Suppose the value of your time is ​$22 per hour and you work 21 days per​ month, with each day requiring a​ round-trip commute from your apartment to work.

question and answer below

Suppose apartments are in four​ locations: Location​ A, Location​ B, Location​ C, and Location D. Location A is in the​ city, where your job is. Location B is 10 minutes farther from your job than Location A. Location C is 10 minutes farther from your job than Location​ B, and Location D is 10 minutes farther than Location C. In​ turn, similar apartments in Location B rent for ​$165 less per month than apartments in Location​ A, apartments in Location C rent for ​$165 less than in Location​ B, and apartments in Location D rent for ​$165 less than in Location C. Suppose the value of your time is ​$20 per hour and you work 21 days per​ month, with each day requiring a​ round-trip commute from your apartment to work.

question below with answer

There is a proverb​ "anything worth doing is worth doing​ well." Do you think an economist would agree with this​ proverb

​No, because the marginal cost of extra effort may be greater than the marginal benefit.

Does the principle of optimization imply that people always make the best​ choices?

​Yes, it is a good approximation for the decisions people make