ECON - 202 - ASSESS Quizzes and Homework
Optimization is the process that describes
the choices that governments make
The costs of making a product must be (1) the final price at which the product sells.
(1) less than
You are hired as a consultant for a local restaurant. It is considering whether to close at 9:00pm, stay open an extra hour (10:00pm), or close earlier (8:00pm). Based on wages and utility bills, the added cost (the marginal cost) of staying open for each addition hour is $285. If the additional revenue (the marginal revenue) during the last hour is $305, the profit earned during the last hour of operation will be $(1). If the additional revenue during the last hour is $215, the profit earned during the last hour of operation with be $(2). If the additional revenue (the marginal revenue) from staying open until 10:00pm is $285, the profit earned during the last hour of operation will be $(3)
1) $20 If the restaurant stays open for an additional hour, it will earn a profit equal to the difference between the marginal revenue during the last hour and the marginal cost of staying open for an additional hour. -subtract the marginal cost from the marginal revenue 2) -$70 -subtract the marginal cost from the additional revenue (may be negative number). 3) $0 - subtract the marginal cost from the marginal revenue
The mean and the median are closely related concepts. The median is the numerical value separating the higher half of your data from the lower half. You can find the median by arranging all of the observations from lowest value to highest value and picking the middle value (assuming you have an odd number of observations). Although the mean and median are closely related, the difference between the mean and the median is sometimes of interest. Suppose country A has five families. Their incomes are $10,000, $20,000, $31,000, $40,000, and $49,000. Country A's median income is (1) and its mean income is (2). (Round your responses to the nearest dollar.) Suppose country B also has five families. Their incomes are $10,000, $20,000, $31,000, $40,000, and $151,000. Country B's median income is (3) and its mean income is (4). (Round your responses to the nearest dollar.) Country (5) has greater income inequality Suppose you thought income inequality in the United States had increased over time. Based on your answers to this question, would you expect the ratio of the mean income in the United States to the median income has risen or fallen? Explain. (6)
1) $31,000 2) $30,000 3) $31,000 4) $50,400 5) B 6) Risen, because means change more with extreme values.
You have been invited to play a 4-hour round of golf that has a value to you of $90. The total price to play the round of golf is $35. The net benefit of the round of golf is $ (1). Now assume that you have a job that pays you $6 per hour. Would you be optimizing to accept the invitation to play golf? To optimize, you should (2) golf.
1) $55. 2) play
You are a professor of economics at a university. You've been offered the position of serving as department head, which comes with an annual salary that is $8,500 higher than your current salary. However, the position will require you to work 200 additional hours per year. Suppose the next best use of your time is spending it with your family, which has value of $10 per hour. What is the difference in the net benefit from becoming the department head? The change in net benefit is (1)
1) $6500 2) should
You are considering renting a city apartment with 1,000 square feet for $1,200 per month. The monthly rent on a larger, 1,500-square-foot city apartment is $1,700. The marginal cost of renting an apartment with 500 additional square feet is $(1) per square foot per month.
1) 1 Marginal cost is the extra cost generated by moving from one feasible alternative to the next feasible alternative. The 1,500-square-foot apartment costs $500 more per month than the 1,000-square-foot apartment, from rent of $1,700 minus rent of $1,200 per month. The marginal cost of the larger apartment equals $500 divided by 500 square feet.
Consider the following data that show the quantity of coffee produced in Brazil from 2004 to 2012. Year 2004; 2005; 2006; 2007; 2008; 2009; 2010; 2011; 2012 Production (in tons) 2,465,720; 2,140,169; 2,573,368; 2,249,011; 2,796,927; 2,440,056; 2,907,265; 2,700,440; 3,037,534 This is illustrated in the time series graph on the right The mean quantity of coffee that Brazil produced from 2009 to 2011 is (1) tons. (round your response to two decimal places). The 2012 crop has increased over the 2009-2011 mean by (2) percent. (round your response to the two decimal places).
1) 2,682,587 2) 13.23
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 $60, while golf has value to you equal to $115. Tennis courts are publicly available at no cost, but golf costs $30 per round. Suppose your wage from working is $6 per hour. The net benefit from playing tennis is (1) and the net benefit from playing golf is (2). Therefore, you should play (3)
1) 48 2) 61 3) golf
You are a professor of economics at a university. You've been offered the position of serving as department head, which comes with an annual salary that is $8,500 higher than your current salary. However, the position will require you to work 200 additional hours per year. Suppose the next best use of your time is spending it with your family, which has value of $40 per hour. What is the difference in the net benefit from becoming the department head? The change in net benefit is (1) To optimize, you should (2) become a department head.
1) 500 2) should
Suppose your total benefit from eating slices of pizza (value in dollars) is where x is the number of slices of pizza. (14x-x^2). Pizza is sold by the slice and costs $2 per slice, and so that the total cost of pizza is 2x. Using optimization in levels, what is the optimal amount of pizza for you to eat? Your net benefit is maximized at (1) slices of pizza.
1) 6 slices 14x-x^2 = 14(1) - (1)^2 = 13 Total cost of the first pizza slice is: 2x = 2(1) = 2. The total benefit of the second pizza slice is: 14x-x^2 = 14(2) - (2)^2 = 24 The total cost of the second pizza slice is: 2x = 2(2) = 4. Calculated similarly, the total benefit and total cost of other levels of pizza consumption are shown below. The total net benefit is the total benefit minus the total cost Slices of pizza (1): 0; 1; 2; 3; 4; 5; 6; 7; 8 Total benefit (2): 0; 13; 24; 33; 40; 45; 48; 49; 48 Total Cost (3): 0; 2; 4; 6; 8; 10; 12; 14; 16
Suppose your New Year resolution is to get back in shape. You are considering various ways of doing this: you can sign up for a gym membership, walk to work, take the stairs instead of the elevator, or watch your diet. How would you evaluate these options and choose an optimal one?
1) Do a cost-benefit analysis to compare the alternatives
In which of the following areas will taking an economics course help benefit you throughout your life?
1) It will instill the concept that what activity is given up by a decision plays an important role when making choices. 2) It will help you analyze and predict human behavior in a variety of situations 3) It will give you the logic behind using cost-benefit analysis when evaluating decisions 4) ALL OF THE ABOVE!
There is a proverb "anything worth doing is worth doing well." Do you think an economist would agree with this proverb?
1) No, because the marginal cost of extra effort may be greater than the marginal benefit. The principle of optimization at the margin states that an optimal feasible alternative has the property that moving to it makes you better off and moving away from it makes you worse off.
Suppose you have just been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. During a meeting with your client, the CEO asks if your economic models include all factors that impact gasoline prices. What is your response to his question? (1) Your client becomes critical of your "sloppy" technique of using a model that does not include all factors. What is the most appropriate reply to this criticism? (2) He is still unconvinced about the reliability of using economic models to make business decisions. You can answer this concern by sharing that you will confirm the accuracy of the model by (3) with (4).
1) No, the model is a simplified representation of reality. 2) Economic models are meant to be approximations that predict what happens in most circumstances 3) testing its predictions 4) empirical data
Economics, anthropology, psychology, sociology, and political science all study human behavior. Economics differs from these other social sciences because it also addresses these three key concepts: (1)
1) Optimization, equilibrium, and empiricism
Free riding occurs because (1)
1) People sometimes pursue their own private interests and don't contribute voluntarily to the public interest
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? (1) How will this result impact people as they decide how close to live to the city where they work? They will be (2)
1) The total cost of commuting from any given distance to work will reduce because the indirect cost of the commute will fall. 2) more willing to locate farther from the city
Which of the following could be considered an economic agent?
1) Workers 2) Parents 3) Firms 4) Criminals
As the text explains, it can sometimes be very difficult to sort out the direction of causality. Causation occurs when there is (1) Demonstrate causation or correlation with the following examples: More (2) and (3) crime rates is likely to be a (4). More (5) and (6) employment levels is likely to be a (7) The length of women's skirts and stock market performance is likely to be (8)
1) a logical cause-and-effect relationship 2)police officers 3) lower 4) causation 5) economic growth 6) higher 7) causation 8) correlation
Which of the following is subject to the free-rider problem? (1-4)
1) a neighborhood watch 2) public libraries 3) national security 4) ALL OF THE ABOVE!
Economics is divided into two broad fields of study: microeconomics and macroeconomics. Microeconomics studies (1), while macroeconomics studies (2).
1) a small piece of the overall economy 2) the economy as a whole.
The definition of economics states that it is the study of how (1).
1) agents choose to allocate scarce resources and the impact of those choices on society.
Suppose that you allocate $20 each week for your entertainment budget. This money is spent on two items: either renting movies for $1 each at Redbox or downloading songs from iTunes at $1 each. Given this information, which of the following would represent your budget constraint for entertainment? (1)
1) amount spent on iTunes + Amount spent at Redbox = $20
Identify the cause and effect: A surge in cocoa prices is (1) and a pest attack on the cocoa crop is (2)
1) an effect 2) the cause
Identify the cause and effect: Lower infant mortality is (1) and an improvement in nutrition is (2)
1) an effect 2) the cause
To say that economists use the scientific method means that they are using (1)
1) an ongoing process to develop models of the world and then test and evaluate those models
When making your decision about which activity to choose, you should consider the monetary cost (1) the opportunity cost of the activities. The goal is to choose the option that offers the greatest (2) benefit
1) as well as 2) net
Policy decisions made by the government are analyzed by (1)
1) both microeconimcs and macroeconomics
Since optimization is used to analyze people's choices and help them improve the outcomes of their choices, its (1)
1) both normative and positive
You are taking two courses this semester, biology and chemistry. You have quizzes coming up in both classes. The table below shows your grade on each quiz for different numbers of hours studying for each quiz. For instance, the second row implies that one hour of studying for Chemistry will generate an expected grade of 67 on Chemistry, whereas one hour of studying for Biology will generate an expected grade of 66 on Biology. Hours of study: 0; 1; 2; 3 Chemistry: 50; 58; 64; 68 Biology: 64; 71; 76; 79 Your goal is to maximize your average grade on the two quizzes. Use the idea of optimization in differences to decide how much time you would spend studying for each quiz if you had a total of 1, 2, or 3 hours to prepare for each exam. If you had 1 hour, you should study (1) If you had 2 hours, then you should probably study (2) hours for chemistry and (3) hours for biology. If you had 3 hours, then you should study (4) hours for chemistry and (5) hours for biology.
1) chemistry 2) 1 3) 1 4) 2 5) 1 With one hour, you will raise your chemistry grade by 7 points from spending it on chemistry (to a grade of 67 with an hour of study from a grade of 60 with no study) and your biology grade by 8 points from spending it on biology (to a grade of 66 with an hour of study from a grade of 58 with no study). Thus, you should spend this hour studying biology because the marginal benefit from doing so is larger. If you had a second hour with which to study, then you should study chemistry since you would raise your chemistry grade by 7 points from a first hour of study (to a grade of 67 with an hour of study from a grade of 60 with no study), but you would raise your biology grade by just 6 points from a second hour of study (to a grade of 72 with two hours of study from a grade of 66 with one hour of study). If you had a third hour with which to study, then you should study biology since you would raise your biology grade by 6 points from a second hour of study (to a grade of 72 with two hours of study from a grade of 66 with one hour of study) and you would raise your chemistry grade by just 5 points from a second hour of study (to a grade of 72 with two hours of study from a grade of 67 with one hour of study).
Scott loves to go to baseball games, especially home games of the Cincinnatti Reds. All else equal, he likes to sit close to the field. He also likes to get to the stadium early to watch batting practice. The closer he parks to the stadium the more batting practice he is able to watch (the garages all open simultaneously). Find Scott's optimal seat type and parking garage using the information that follows. Location/Seat Diamond Seats; Club home; club seating; scout box; scout Price: 227; 87; 77; 73; 63 Scott's Value of View: 140; 135; 130; 125; 105 Parking Location: Westin parking garage; Fountain square south garage; West river parking; East river parking; Under stadium parking Parking fee: 6; 11; 18; 25; 35 Arrival time: 6:20; 5:50; 5:25; 5:10; 5:00 Missing batting practice: 60min; 50min; 25min; 10min; 0min Benefit of arrival time: 0; 10; 35; 50; 65 Scott's optimal seat type is (1) Scott's optimal parking is (2)
1) club seating 2) The Principle of Optimization at the Margin states that an optimal feasible alternative has the property that moving to it makes you better off and moving away from it makes you worse off. Marginal cost is the extra cost generated by moving from one feasible alternative to the next feasible alternative. For example, the marginal cost of Westin parking is $6, from $6 for Westin parking minus $0 for no parking. The marginal cost of Fountain Square South parking is $5, from $11 for Fountain Square South parking minus $6 for Westin parking. Calculated similarly, the marginal costs for other parking are shown below. Marginal benefit is the extra benefit generated by moving from one feasible alternative to the next feasible alternative. For example, the marginal benefit of arriving at 6:20 is $0, from $0 value from arriving at 6:20 minus $0 from not arriving at all. The marginal benefit of arriving at 5:50 is $10, from $10 for arriving at 5:50 minus $0 from arriving at 6:20. Calculated similarly, the marginal benefits for other arrival times are shown below. Optimization occurs when Scott selects Under stadium parking and the corresponding arrival time, which is the most expensive parking for which the marginal benefit is greater than the marginal cost.
Comparing a set of feasible alternatives and picking the best one is an optimization process called (1)
1) cost-benefit analysis
Reflect on your experiences as a seller in the economic experiment to answer the following question. It's nearing the end of a round, and you still haven't made a transaction. If you want to make sure you do—following the practices of the experiment—you will (1). All else equal, a decrease in your ask price will (2) your gains, but this is preferable to making no transaction at all, in which case your gain would be (3)
1) decrease your ask price 2) decrease 3) zero
If we arrange the WTP values from high to low and the cost values from low to high, we can use the data to plot the diagram to the right. Q 1; 2; 3; 4; 5; 6; 7; 8; 9; 10 WTP 19.25; 19.00; 17.75; 16.50; 15.00; 13.75; 12.50; 12.00; 11.00; 9.50 Costs 2.50; 2.75; 4.50; 6.25; 6.50; 8.75; 10.50; 12.00; 13.50; 16.00 The willingness to pay values also provide the data for a (1) curve. The cost values provide the data for a (2) curve
1) demand 2) supply
Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your client would like your team to perform a study on customers' gasoline purchasing habits when they notice price increases. You suggest that the team (1) Debbie, a member of your team, advocates finding random people and then breaking them up into two groups. Group A would be shown an increase in the price of gas before taking the survey. Group B would be told there was no increase in the price of gas before taking the survey. Troy, another member of your team, recommends finding two groups of people already sorted by whether or not they have recently noticed an increase in the price of gas. Debbie's method is a (2) and Troy's method is a (3) Group A is the (4) and Group B is the (5).
1) design and execute an experiment 2) controlled experiment 3) natural experiment 4) treatment group 5) control group
Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your research has uncovered the following data: Price of crude oil $80; $90; $100; $110 GDP 17.0; 16.9; 16.8; 16.7 # of New Mustaches Grown 3,000; 2,000; 5,000; 1,000 Price of Gasoline $2.75; $3.00, $3.25, $3.50 Your client has asked you to plot GDP and gasoline prices on a graph. (1) There is (2) correlation between GDP and gasoline prices
1) draw a line from $3.50 and 16.7 to $2.75 and 17.0 2) negative
Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. Your research has uncovered the following data: Price of crude oil $80; $90; $100; $110 GDP 5,000; 4,700; 4,500; 4,300 # of New Mustaches Grown 3,000; 2,000; 5,000; 1,000 Price of Gasoline $2.75; $3.00, $3.25, $3.50 Your client has asked you to plot crude oil prices and gasoline prices on a graph. (1) The cause, or independent variable, should be plotted on the (2) and the effect, or dependent variable, should be plotted on the (3). Using the multipoint curve drawing tool, plot crude oil prices against gasoline prices on the graph to the right. There is a (4) correlation between oil prices and gasoline prices.
1) draw first dot @ $2.75 over 80. increase to $3.50 over 110. 2) x-axis 3) y-axis 4) positive
Assume that income inequality has increased between 2000 and 2010 in the United States. Assume that both mean and median incomes are $40,000 in 2000 and that median income remains constant through 2010. 1.) Using the line drawing tool, draw a line representing median income from 2000 to 2010. Label your line appropriately. 2.) Using the line drawing tool, draw a line for mean income to represent a rising degree of income inequality over time. Label your line appropriately.
1) draw straight line from 40 to 2010 and label it "median" 2) draw line from 40 to 100 (2010). Label it "mean"
The amount produced by sellers must be (1) the amount purchased by buyers.
1) equal to
Consider the following data that show the quantity of coffee produced in Brazil from 2007 to 2011. Year 2007; 2008; 2009; 2010; 2011 Production (in tons) 220; 250; 260; 300; 250 Using the multipoint curved line drawing tool, graph the annual coffee production on the graph to the right (1) The mean quantity of coffee produced is (2) Suppose, due to favorable weather, the crop in 2012 is 320 tons. In percentage terms, how much bigger is the 2012 crop over the 2007-2011 average? The 2012 crop is (3) percent larger. (round your response to two decimal places).
1) first point, 220 and 2007; 250 and 2008, 260 and 2009; 300 and 2010; 250 and 2011 2) 256 3) 25
Buyers must place a value on the uses of the product that is (1) the cost of buying the product
1) greater than
Reflect on your experiences as a buyer in the economic experiment to answer the following question. It's nearing the end of a round, and you still haven't made a transaction. If you want to make sure you do—following the practices of the experiment—you will (1) All else equal, an increase in your bid price will (2) your gains, but this is preferable to making no transaction at all, in which case your gain would be (3)
1) increase your bid price 2) decrease 3)zero
Which of the following statements is not a correct explanation of empiricism? (Check all that apply.)
1) it has nothing to do with optimization and equilibrium 2) it cannot be monitored
In playing the market experiment (and in real life) as a buyer or consumer, the advantage of bidding low is (1). The disadvantage of bidding low is there is (2) As a seller or producer, the advantage of offering a high ask is (3). The disadvantage of a high ask is there is (4)
1) maximizing your gain 2) less likelihood of making a transaction 3) maximizing your profits (or gain). 4) less likelihood of making a transaction
A policy such as taxes on cigarettes would be studied under (1) microeconomics, since it deals with a (2)
1) microeconomics 2) a small part of the overall economy
The three principles of economics include optimization, equilibrium, and empiricism. Equilibrium describes a situation where (1) Empiricism describes a situation where (2) Optimization describes a situation where (3)
1) no one would benefit from changing his or her behavior 2) economists use data to analyze what is happening in the world 3) people weigh costs and benefits when making a decision
A simple economic model predicts that a fall in the price of bus tickets means that more people will take the bus. However, you observe that some people still do not take the bus even after the price of a ticket fell. Is the model incorrect? (1) How would you test this model? (2)
1) no, because it predicts the outcome of increased bus ridership on average 2) you should run a natural experiment by analyzing bus ridership and price changes
Suppose you have just been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations. During a meeting with your client, the CEO asks if your economic models include all factors that impact gasoline prices. What is your response to his question? (1) Your client becomes critical of your "sloppy" technique of using a model that does not include all factors. What is the most appropriate reply to this criticism? (2) He is still unconvinced about the reliability of using economic models to make business decisions. You can answer this concern by sharing that you will confirm the accuracy of the model by (3) with (4)
1) no, the model is a simplified representation of reality 2) Economic models are meant to be approximations that predict what happens in most circumstances 3) testing its predictions 4) empirical data
The statement that the United States has too many illegal immigrants is a (1) statement since it describes what people (2).
1) normative 2) ought to do
The ethical implications of a hotly debated government policy would best be considered a (1)
1) normative question, since it deals with a subjective issue based on personal preferences.
Determine if the following statements better describe optimization in levels or optimization in differences. John is attempting to decide on a movie. He determines that the new Batman movie provides him with $5 more of a net benefit than the new spiderman movie. (1) Marcia finds that the net benefit of flying from Chicago to Honolulu on a non-stop United Airlines flight is $400, and the net benefit for the same trip flying on a one-stop American Airlines flight is $200. (2) Nikki decided to take the first available parking space as she entered the student lot. She felt that the first available space had a $5 premium compared with all other possible spaces since she did not want to risk being late for her exam. (3) Reagan determined that the net benefit of taking the combination of two lecture courses and an online lecture course was $100. The same three courses online gave her a net benefit of $80, and all three in a lecture-based format gave her a net benefit of $90. (4)
1) optimization in differences, since he is calculating the change in net benefits between alternatives. 2) optimization in levels, since she is comparing the net benefits between alternatives. 3) optimization in differences, since she is calculating the change in net benefits between alternatives. 4) Optimization in levels, since she is comparing the net benefits between alternatives optimization in levels calculates the total net benefit of different alternatives and then chooses the best alternative. optimization in differences calculates the change in net benefits when a person switches from one alternative to another and then uses these marginal comparisons to choose the best alternatives.
Economics differs from these other social sciences because it also addresses these three key concepts: (1)
1) optimization, equilibrium, and empiricism
The goal of optimization for an individual is to maximize (1)
1) overall well-being
Free rider occurs when (1) are out of sync with (2).
1) people's private benefits 2) the public interest
Which of the following are considered scarce resources?
1) pepperoni pizzas 2) gas 3) gold 4) time
The statement that the United States has a lower unemployment rate than Spain is a (1) statement since it describes what people (2).
1) positive 2) actually do
In general people with more education earn higher salaries. Economists have offered two explanations of this relationship. The human capital argument says that high schools and colleges teach people valuable skills, and employers are willing to pay higher salaries to attract people with those skills. The signaling argument says that college graduates earn more because a college degree is a signal to employers that a job applicant is diligent, intelligent, and persevering. The (1) implies that a college student who drops out of school one month before graduation should earn much less than a student who graduates. The (2) implies that a college student who drops out of school one month before graduation should earn almost the same as a student who graduates.
1) signaling argument 2) human capital argument
The Lancet, a leading medical journal, published a paper on a possible link between autism in children and the measles, mumps, rubella (MMR) vaccine. Following this, the number of MMR vaccinations fell and the incidence of mumps increased. Examine each of the following statements carefully. Which of these statements, if true, would help you conclude that there is indeed a cause-and-effect relationship between the vaccine and autism in children? (Check all that apply.)
1) the MMR vaccine contains thimerosal, a preservative that is known to increase the risk of autism. 2) the survey was conducted on a large group whose members were randomly selected.
When deciding whether to install visible countdown timers for pedestrians at crosswalks, which of the following would be considered in the cost-benefit analysis? (1-4)
1) the cost in terms of dollars of installing these new timers all over the city 2) the higher maintenance bill associate with fixing these more complex signals when they break down 3) the value of the pedestrians' lives saved by having the timers to assist in crossing the street 4) the value of the lives lost by drivers who watch the countdown timers and try to make it through a light
You and you friend, Jim, have just moved out of your dorm and into a new apartment. Both of you decide that you need to get a couch. Jim thinks you should get a new one from the furniture store nearby. You feel that, given your budget, it is best to buy a used one. Your other option are to buy one online or get a couch custom-made at the same furniture store. How would you arrive at an optimal solution here? Assume that your opportunity cost of time is $5 per hour. You and Jim would need to consider (1). Now suppose that you have a summer job that pays you $15 per hour. How would your analysis change? With a $15-per-hour summer job, (2) would increase.
1) the direct costs and the indirect opportunity cost of your time required to shop. 2) the opportunity cost of your time
During the process of optimization economists believe that people are considering (1)
1) the feasibility of a choice, given the information available at the time
How does the sample size affect the validity of an empirical argument?
1) the larger the sample size the better
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following order: going to class, sleeping in late, going to work early, getting lunch, going to the gym to exercise, and watching television. If you decide to go to class, then what do we know about the opportunity cost of your decision? (1)
1) the opportunity cost would be sleeping in late, since it was your next-best option
How do economists distinguish between models that work and those that don't?
1) they test their models against real-world data
Optimization in levels examines (1), while optimization in differences analyzes (2)
1) total net benefits of alternatives 2) the change in net benefits
Your budget constraint for entertainment illustrates the concept of (1), since as you increase your purchases of one item, you (2)
1) trade-offs 2) must decrease your purchases of the other item
Scarcity is the situation of having (1) wants in a world of (2) resources
1) unlimited 2) limited
The opportunity cost of an activity is a measure of (1) when you do that activity
1) what is given up
Suppose that you are on a date with an economics major, and you want to impress them by talking about economics. Your date challenges you to state your knowledge of positive and normative questions. You say that positive questions ask (1) and normative questions ask (2) Which of the following examples do you provide as a normative question? (2) Which of the following do you provide as a positive question? (3)
1) what is or what will be 2) what ought to be 3) should welfare be repealed? 4) how much is the national debt?
Suppose that you are on a date with an economics major, and you want to impress them by talking about economics. Your date challenges you to state your knowledge of positive and normative questions. You say that positive questions ask (1) and normative questions as (2) Which of the following examples do you provide as a normative question? (3) Which of the following do you provide as a positive question? (4)
1) what is or what will be 2) what ought to be 3) Should welfare be repealed 4) How much is the national debt?
Suppose you have been hired as a management consultant by a major oil company to help it optimally price gasoline at its service stations Your research uncovered the following data: Price of Crude Oil $80; $90; $100; $110 GDP 5,000; 4,700; 4,500, 4,300 # of New Mustaches Grown 3,000; 2,000; 5,000; 1,000 Price of Gasoline $2.75; $3.00; $3.25; $3.50 Your client has asked you to plot crude oil prices and gasoline prices on a graph. The cause, or independent variable, should be plotted on (1) and the effect, or dependent variable, should be plotted on the (2). Using the multipoint curve drawing tool, plot crude oil prices against gasoline prices on the graph to the right. (3) There is a (4) correlation between oil prices and gasoline prices
1) x-axis 2) y-axis 3) graph: 2.75 and 80, 3.00 and 90, 3.25 and 100, 3.50 and 110 4) positive
Reflect on your experiences as a buyer in the economic experiment to answer the following question. You notice that you always make your transaction at the very beginning of the round. Although it's nice to transact every time, offering a price so high that sellers immediately accept it might mean (1). You can increase your gain by (2), although you do so at the risk of (3)
1) you're receiving too small of a gain 2) decreasing your bid price 3) lowering the chance of making a successful transaction
Reflect on your experiences as a seller in the economic experiment to answer the following question. You notice that you always make your transaction at the very beginning of the round. Although it's nice to transact every time, offering a price so low that buyers immediately accept it might mean (1). You can increase your gain by (2), although you do so at the risk of (3) However, suppose you could adopt more efficient technology that lowers cost. Without changing the price you charge customers, (4)
1) you're receiving too small of a gain 2) increasing your ask price 3) lowering the chance of making a successful transaction 4) your gain will rise because your costs will fall
A company mines 420,000 tons of coal per year in a rural county. The coal is worth $71 per ton. The average price for a 2,000-square-foot house with three bedrooms more than 20km away from the mining site in this county is $250,000. The average price for a similar, 2,000-square-foot house with three bedrooms within 4km of the mini s8 percent lower. Using comparative statics, what is the effect of mining on home prices in the county? Mining changes the price of a 2,000-square-foot home (with three bedrooms) by $(1).
1)$-9,200 Comparative statics is the comparison of economic outcomes before and after some economic variable is changed. (multiply the cost of the house (in negative) by the %) - to get the cost of the house, subtract the answer from the original cost of the house.
Which of the following is true regarding the concept of causation?
It describes how one event can bring about change in another
What is meant by randomization in the context of an economic experiment?
Subjects are assigned by chance, rather than by choice, to a group.
In which of the following examples is the cause and the effect hard to untangle?
The relation between dense forests and heavy rains
Some people go to a new gym because it just happened to open up right next to where they live. People who live farther away do not go to this new gym as much. You compare fitness between these two groups. Using the concept of a natural experiment, which of the following statements is true about the scenario?
This is a good natural experiment
Which of the following is more susceptible to the free-rider problem: State parks or public roads?
Use of public roads is more susceptible since even those who don't pay taxes still benefit, while state parks can charge for admission, so that everyone who goes pays their share.
Which of the following is NOT an example of causation?
Washing your car will lead to raining that day
Does the principle of optimization imply that people always try to make the best choices?
Yes, it is a good approximation for the decisions people make.
The minimum price at which a seller is willing to sell is based on that seller's
costs
