ECON HW 2

It is a beautiful afternoon and you are considering taking a leisurely stroll through the park. Your alternatives to walking are streaming a movie that you value at $7 or reading a new book that you value at $12. What is the opportunity cost to you of taking the stroll through the park?

$12

The marginal principle breaks quantity decisions into iterative decisions that use the __________

cost-benefit principle

You have paid $100 for student season tickets to the football games at your university. It is halfway through the season, and the team has not won any games. You are considering whether you will attend any future games this season. All of the following are costs or benefits you should consider when making this decision EXCEPT the ____ a. $100 you spent on the season tickets. b. time spent to go to the game instead of studying. c. satisfaction you will get if your team wins a game. d. $5 you can make per game by selling your remaining tickets.

a. $100 you spent on the season tickets.

When resources are organized according to the principle of comparative advantage, individuals become______________

more specialized so they can trade and end up with more of everything

The table provides data on how long it takes Marla and Jason to cook lasagna and cook chicken curry marla- 4hr lasagna 3hr chicken curry jason- 3hr lasagna 1hr chicken curry which statement who has a comparative advantage in cooking chicken curry? a. marla because she can cook lasagna faster than jason b. jason because he has a lower opportunity cost than marla c.jason because he can cook faster than marla d.marla because she has a lower opportunity cost than jason

b.jason because he has a lower opportunity cost than marla

The key to using the cost benefit principle is to think about ___________ aspects of a decision

both financial and non financial

if Ilona wants to live her life based on comparative advantage then she should_________________

do for herself the things for which she has low opportunity cost and trade with others for things she has a high opportunity cost

the opportunity cost of attending a movie instead of babysitting for your neighbor includes the... a. cost of movie ticket and popcorn (only) b. lost income from not working (only) c. cost of clothes to wear that day. (only) d. the time you spend driving to the movie (only) e. Cost of movie ticket, popcorn, gas to drive to movie and foregone wages. (not clothes). f. Cost of movie ticket, popcorn, gas to drive, clothes to wear. (not wages)

e. Cost of movie ticket, popcorn, gas to drive to movie and foregone wages. (not clothes) Correct!! Assuming you'd wear the same clothes to the movie or babysitting OR you wouldn't return the clothes regardless of your choice, the cost of the clothes should NOT be considered.

Charles McCoy is manager at a coffee shop and he has to decide how many workers to hire. One worker can make 20 drinks that sell for $4 on average in one hour. A second worker can make another 16 drinks in one hour. The marginal benefit of each additional worker decreases by 4 drinks, with each additional hire. Given that workers are paid $15 an hour and have 8-hour shifts how many employees should Charles hire for each hour?

five

Mana has a comparative advantage in baking a cake. This means that she

gives up less to bake a cake than other bakers give up to bake a cake

When you assign tasks to employees based on comparative advantage, task assignments go to those with the____ a. lowest wage. b. highest wage. c. highest opportunity cost. d. lowest opportunity cost.

lowest opportunity cost

Asking "One more?" allows the _____ principle to be analyzed as a simple question.

marginal

sunk costs should_______ be considered as part of the opportunity costs of a decision

never

Asking "or what?" allows the _______ principle to be analyzed as a simple question

opportunity cost

sunk costs are costs that are incurred

regardless of which decision is made

It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8. Because of the weather the surcharge is twice the regular cost, so the trip will cost $16. You should _________ because the benefit of taking the Uber is ____________ than the cost.

take an Uber; more

the term "gains from trade" means the

the benefits that come from reallocating resources, goods, and services to better uses

What point represents a productively efficient combination of good x and good y

the point on the line

Economics is the study of

trade-offs when making decisions