ECON 2302 - HW 1B

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th meal is: Multiple Choice $6. $4. $0.25. $0.

$0

Suppose the most you would be willing to pay for a plane ticket home is $250. If you buy one for $175, then your economic surplus is: Multiple Choice $250. $175. $75. $0.

$75

Refer to the accompanying table below. The average benefit of 4 units of activity is: Units of Activity Total Cost Total Benefit 0 $0 $0 1 $2 $12 2 $6 $22 3 $12 $30 4 $20 $36 5 $30 $40 6 $42 $42 7 $56 $43 Multiple Choice $4 $5 $9 $10

$9 36/4=9

MC Qu. 84 The accompanying table below shows how total... The accompanying table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. Number of Employees Total Donations Average Donations Total Labor Costs Average Labor Costs 1 $30,000 $8,000 2 $42,426 $17,000 3 $17,321 $27,000 4 $60,000 $9,500 5 $13,416 $50,000 The Chair of the Economics Department at State U says that fundraising employees should be hired as long as their marginal benefit exceeds their marginal cost. If the University follows this advice, then ______ employee(s) will hired, and the net benefit (total donations minus total labor costs) will be ______. 1; $22,000 2; $25,426 3; $25,426 2; $3,476

2; $25,426

efer to the accompanying table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out? Units of Activity Total Cost Total Benefit 0 $0 $0 1 $2 $12 2 $6 $22 3 $12 $30 4 $20 $36 5 $30 $40 6 $42 $42 7 $56 $43 Multiple Choice 2 3 4 5

3

Suppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3rd game is: Multiple Choice 125 5 41.67 375

5

The Scarcity Principle applies to: all decisions. only market decisions, e.g., buying a car. only non-market decisions, e.g., watching a sunset. only the poor.

all decisions.

Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is: Multiple Choice A. not an economic problem because neither activity costs money. B. not an economic problem because it's an hour that Chris has no matter what he does. C. an economic problem because the tuition Chris pays covers the cost of both the gym and the library. D. an economic problem because Chris has only one hour, and engaging in one activity means giving up the other.

D. an economic problem because Chris has only one hour, and engaging in one activity means giving up the other.

Every time you go to the grocery store, you try to wait in the shortest line. But the lines always seem to be roughly the same length. Why? Multiple Choice Random chance equalizes the length of the lines. Other people are trying to choose the shortest line too. The cashiers work at the same speed. The cashiers do not have an incentive to work faster.

Other people are trying to choose the shortest line too.

The Incentive Principle states that a person: is more likely to take an action if its cost increases. is more likely to take an action if its benefit increases. should take an action if its cost increases. should take an action if its benefit increases.

is more likely to take an action if its benefit increases.

An implication of scarcity is that: Multiple Choice people will never be happy. making trade-offs becomes unnecessary as wealth increases. some people will always be poor. people must make trade-offs.

people must make trade-offs.

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. Your economic surplus from going to work instead of seeing SPAM on Saturday is: Multiple Choice $0 $1 $35 $36

$1

The following accompanying table shows the relationship between the speed of a computer's CPU and its benefits and costs. Assume that all other features of the computer are the same (that is, CPU speed is the only source of variation), and only the CPU speeds listed below are available for purchase. CPU GHz Total Benefit Marginal Benefit Total Cost Marginal Costs 2.0 $1,000 $900 2.5 $1,400 $100 3.0 $300 $1,200 3.5 $1,900 $1,500 4.0 $2,000 $400 The total benefit of a 3.0GHz computer is: Multiple Choice $300. $900. $1,700. $1,650.

$1,700

A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. What is the marginal cost of producing the computers that Pam can assemble during her 2nd hour of work? Multiple Choice $1,800 $1,840 $4,200 $4,280

$1,840

Due to the fact that Curly used his frequent flyer miles to fly to visit Moe, Curly told Moe that it didn't cost him anything to visit. Is Curly correct? Multiple Choice A. Yes, because Curly's frequent flyer miles made the trip free. B. Yes, because Curly could stay at Moe's house for free. C. No, because Curly could have used his frequent flyer miles to go somewhere else instead. D. No, because Curly had to pay for earlier trips in order to earn the frequent flyer miles.

C. No, because Curly could have used his frequent flyer miles to go somewhere else instead.

Dean should play golf instead of preparing for tomorrow's exam in economics if: A. he is irrational. B. the benefit of golfing is greater than the benefit of studying. C. the economic surplus from playing golf is greater than the economic surplus from studying. D. Dean can play golf for free.

C. the economic surplus from playing golf is greater than the economic surplus from studying.

Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. If Alex becomes a full-time student, then: Multiple Choice A. attending State U. for four years is costless for Alex. B. Alex has no incentive to study hard while at State U. C. the opportunity cost of attending State U. includes the money Alex could have earned working for four years. D. the opportunity cost of attending State U. includes the sum of the benefits Alex would had from attending each of the other schools to which he was admitted.

C. the opportunity cost of attending State U. includes the money Alex could have earned working for four years.

Forest lives in complete isolation in Montana. He is self-sufficient and feeds himself through hunting, fishing, and farming. Which of the following statements about Forest is true? Multiple Choice Forest has unlimited resources. Forest is not required to make trade-offs because he is self-sufficient. Forest has to make trade-offs. Forest doesn't have to consider costs and benefits.

Forest has to make trade-offs.

You want to buy a TV that regularly costs $250. You can either buy the TV from a nearby store or from a store that's downtown. Relative to going to the nearby store, driving downtown involves additional time and gas. The downtown store, however, has a 10 percent off sale this week. Last week you drove downtown to save $20 on some concert tickets, a 15 percent savings. Should you drive downtown to buy the TV? Multiple Choice Yes, because you will save 10 percent, which is better than nothing. No, because you will save more than $20. Yes, because you will save more than $20. No, because you will only save 10 percent, which is less than 15 percent.

Yes, because you will save more than $20.

An economic naturalist is someone who: uses economic arguments to protect the environment. has an innate talent for using economic concepts. applies economic insights to understand everyday life. studies the process of natural selection in a cost-benefit framework.

applies economic insights to understand everyday life.