ECO 111 chapter 1&2

You had to pay $600 (non-refundable) for your meal plan for Fall semester, which gives you up to 150 meals. If you eat only 100 meals, your marginal cost for the 100th meal is:

$0

Economics is best defined as the study of:

how people make choices under the conditions of scarcity and the results of those choices

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. (Assume that you would not have been willing to pay any more than $35 for this concert.) Your boss called and she is looking for someone to cover a shift on Saturday at the same time as the concert. You will have to work 4 hours and she will pay you time and a half, which is $9/hr.What is the opportunity cost of going to the concert?

$36

Refer to the figure above. The opportunity cost to produce one bushel of corn is: 1,000 wheat - 500 corn

2 bushels of wheat

You own a pizza shop called "Pizzas'R' Us". Currently you are paying your cooks an hourly wage of $20. You sell a medium pizza for $10. By hiring more cooks, you can increase your pizza production as shown in the following table. cookies - total pizza ph 0 - 0 1 - 4 2 - 7 3 - 9 4 - 10 5 - 10 How many cooks should you hire to maximize your net benefit?

3

You are the Minister of Trade for a small island country in the South Pacific with the following annual production possibilities curve: 500-1500 fish You are negotiating a deal with a neighboring island that has the following annual PPC: 500-2500 fish Refer to the figure above. Both islands specialize exclusively in the product for which they have a comparative advantage. You have agreed to sell the other island 350 coconuts in exchange for 1,300 fish. After the trade the other island has a total of _____ coconuts and _____ fish.

350; 1,200

Earth Movers & Shakers operates 3 iron ore mines. This table shows their daily production rates and the current number of miners at each mine. All of the miners work for the same wage and each miner in any given mine produces the same number of tons as each other miner in that mine. mother lode - 100 tons - 25 miners scraping bottom - 30 tons - 10 miners middle drift - 75 tons - 15 miners Refer to the table above. The daily opportunity cost of moving one miner from Mother Lode to Scraping Bottom is:

4 tons

corey - 12 pizzas made ph - 6 pizzas delivered ph pat - 10 pizzas made ph - 15 pizzas delivered ph Refer to the table above. The comparative advantage for pizza production belongs to __________ and the comparative advantage for pizza delivery belongs to __________.

Corey; Pat

If Leslie can produce two pairs of pants in an hour while Eva can make one pair an hour, then it must be the case that:

Leslie has an absolute advantage

Ginger and Maryann are lost in the jungle, where the only things to eat are mangoes and fish. Ginger can gather mangoes faster than Maryann and can also catch more fish per hour than can Maryann. Therefore:

Maryann should specialize in the activity for which she has a comparative advantage.

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. (Assume that you would not have been willing to pay any more than $35 for this concert.) Your boss called and she is looking for someone to cover a shift on Saturday at the same time as the concert. You will have to work 4 hours and she will pay you time and a half, which is $9/hr. Should you go to the concert instead of working Saturday?

No, your benefit is less than your cost

Refer to the figure above. Which of the following is true given the production possibilities shown? Select one: a. Point C is more efficient than Point B because at Point C the opportunity cost of another warhead is lower than at Point B. b. Point B is the most efficient feasible point because it represents specialization in warheads. c. Point F is the most efficient feasible point because it represents specialization in medical care. d. Points B, C, and E are equally efficient.

Points B, C, and E are equally efficient.

Suppose a person makes a choice that seems inconsistent with the cost-benefit principle. Which of the following statements represents the most reasonable conclusion to draw?

The person (explicitly or implicitly) over-estimated the benefits or under-estimated the costs or both

You need a TV, DVD player, and CD player. The sale flyer from a store downtown shows that the TV that you want to buy is on sale for 10% off of the regular price this week. DVD and CD players are both on sale for 20% off next week. Last week you drove downtown to save $30 on some concert tickets, a 15% savings. The regular prices for TVs, DVD players, and CD players are given in the table below. TV - $250 DVD player - $120 CB player - $200 Suppose instead that the DVD player is on sale for 20% off and the CD player is on sale for 5% off regular price. Should you drive downtown to buy the DVD and the CD player?

Yes, because you will save $34

Any combination of goods that can be produced with currently available resources defines a(n):

attainable point on a production possibilities curve.

The scarcity principle tells us that __________, and the cost-benefit principle tells us __________.

choices must be made; how to make the choices

Refer to the figure above. It is __________ for this farmer to grow 1,000 bushels of wheat and no corn relative to growing 500 bushels of corn and no wheat. 1,000 wheat - 500 corn

equally as efficient

Studying how Pat allocates her time between teaching classes and assisting undergraduate students is an example of:

microeconomics

The fundamental reason the production possibilities curve has a downward slope is:

resources are fixed and therefore tradeoffs must be made.

The incentive principle states that a person is more likely to do something if:

the benefits from doing it increase