Microeconomics Ch 3 Homework

ou are considering renting a city apartment with​ 1,000 square feet for ​$1,600 per month. The monthly rent on a​ larger, 1,500-square-foot city apartment is ​$2,100. The marginal cost of renting an apartment with 500 additional square feet is ​$____ per square foot.

$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, _________________ would increase

the opportunity cost of your time

Optimization in levels examines​ ___________, while optimization in differences analyzes​ ____________.

total net benefits of​ alternatives; the change in net benefits.

You have been invited to play a​ 4-hour round of golf that has a value to you of ​$70 . The total price to play the round of golf is ​$25 . The net benefit of the round of golf is ​$_______. . Now assume that you have a job that pays you ​$10 per hour. Would you be optimizing to accept the invitation to play​ golf? To​ optimize, you should ____________ golf.

$45; Play

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 ​$487. If the additional revenue​ (the marginal​ revenue) during the last hour is ​$537, the profit earned during the last hour of operation will be​ $_________. If the additional revenue during the last hour is ​$417, the profit earned during the last hour of operation will be​ $________. f the additional revenue​ (the marginal​ revenue) from staying open until 10.00 p.m. is ​$487, the profit earned during the last hour of operation will be​ $________.

$50 -$70 $0

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?

$6500

Suppose your total benefit from eating slices of pizza​ (value in​ dollars) is 10 xminusx squared ​, where x is the number of slices of pizza. Pizza is sold by the slice and costs ​$2 per​ slice, and so the total cost of pizza is 2 x. Using optimization in​ levels, what is the optimal amount of pizza for you to​ eat? Your net benefit is maximized at _____ slices.

4 slices Solve this by 10x - x^2 = benefits 2x = costs Solve for costs and benefits and find where there is the greatest equilibrium

The average price for a​ 2,000-square-foot house with three bedrooms more than 20 km away from the mining site in this county is ​$230,000 . The average price for a​ similar, 2,000-square-foot house with three bedrooms within 4 km of the mine is 5 percent lower. Using comparative​ statics, what is the effect of mining on home prices in this​ county?

Mining changes the price of a​ 2,000-square-foot home​ (with three​ bedrooms) by ​-$12,500.

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.

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.

Optimization in​ differences, since he is calculating the change in net benefits between alternatives.

Determine if the following statements better describe optimization in levels or optimization in differences. 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.

Optimization in​ differences, since she is calculating the change in net benefits between alternatives.

Determine if the following statements better describe optimization in levels or optimization in differences. 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.

Optimization in​ levels, since she is comparing the net benefits between alternatives.

Determine if the following statements better describe optimization in levels or optimization in differences. 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.

Optimization in​ levels, since she is comparing the net benefits between alternatives.

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?

The total cost of commuting from any given distance to work will reduce because the indirect cost of the commute will fall.

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. How will this result impact people as they decide how close to live to the city where they​ work?

They will be more willing to locate farther from the city

Since optimization is used to analyze​ people's choices and help them improve the outcomes of their​ choices, its positive, normative, or both?

both positive and normative

You and your​ 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 a furniture store nearby. You feel​ that, given your​ budget, it is best to buy a used one. Your other options 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​ ___________.

the direct costs and the indirect opportunity cost of your time required to shop.