SAPLING CH. 1
tradeoffs
Everything you do requires giving up something (time, money, etc.).
Marginal Benefit
Example of marginal cost, marginal benefit or neither?
Marginal Cost
Example of marginal cost, marginal benefit or neither?
Neither
Example of marginal cost, marginal benefit or neither?
A.
In a market-oriented economy, individuals' economic lives are said to be... A. interrelated with many other individuals and firms. B. almost completely controlled by government regulation. C. illegal and in violation of government rules on prices and sales. D. based more on production than on consumption.
4
Juan Valdez, a coffee farmer in Colombia, sells his coffee to Cafe Emporium, a U.S. firm which specializes in gourmet coffee blends. What can be inferred from the fact that Juan has voluntarily entered into a contract with Cafe Emporium?
2&3
Juan Valdez, a coffee farmer in Colombia, sells his coffee to Cafe Emporium, a U.S. firm which specializes in gourmet coffee blends. What must be true of this arrangement?
B
Megan has a 11 hr gap in her course load for the fall semester. There are two courses available for her to take at that time: reading piano sheet music and beginning rock climbing. She does not have any experience with piano or rock climbing. In the end, she decides to enroll in the rock climbing course, despite her fear of heights. Identify which activity exhibits a potential trade-off with enrolling in rock climbing. A. learning rock climbing skills B. learning to read piano sheet music C. overcoming her fear of heights D. none of the above
scarcity
People have limited resources.
responding to incentives
What Economic Principe best fits this scenario? To entice students to keep themselves up to date with economic current events, an instructor offers extra credit to students for participating in an online discussion forum, and this sparks a lively debate about environmental policy.
marginal decisions
What Economic Principle best fits this scenario? An educational software company wants to expand the number of economics questions that it offers and is considering hiring another economist. It compares how much adding another worker will improve the product with the additional cost.
opportunity cost
What Economic Principle best fits this scenario? On Black Friday, there are huge sales for electronics at many retail stores. David must decide between buying a camera at one store and buying a flat-screen TV at another store, and buying one means he will lose the ability to purchase the other.
The invisible hand
What main principle does this story best illustrate? It is Valentine's Day and Pierre wants to buy his girlfriend Madeline a dozen long‑stemmed roses to show his love for her. He walks into a new neighborhood flower store and reads a plaque next to the roses. Apparently, the roses were grown by farmers in Nairobi, Kenya. What was not mentioned on the plaque was that a shipping company packed them, a pilot flew them on a refrigerated plane, and a trucking company took them to the floral shop. The flower shop owner thought that since the town did not have a flower shop, she could capitalize on the market. Pierre buys a dozen roses from the shop for $60 and presents them to Madeline, much to her delight.
All of these scenarios have an opportunity cost
Which demonstrates a scenario with no opportunity cost?
2
Which fable from Aesop best illustrates the moral idea that incentive spurs effort?
A.
Which is NOT an example of a behavior exhibited in a market economy? A. The president of the European country of Semolina decrees that pasta must be consumed at all meals in an effort to help domestic pasta makers. B. Despite the advice of its business partners, Puna discontinues its most popular lines of clothing, and chooses instead to produce retro jean jackets and purple sweatpants, thinking that jean jackets and sweatpants are bound to make a fashion comeback. C. For their wedding, Alex and Erika choose Matte Photography instead of Pro Finish Photography, since Matte Photography is cheaper. D. Nettoyer decides to introduce a soap scent, Pomegranate, in response to Schoon's new soap scent, Blood Orange, and Sauber's award-winning scent, Tangerine.
standard of living
Which is most likely to increase as a nation experiences an increase in productivity?
D
Which scenario would LEAST likely change an individual's behavior? A. The city of Saskatoon chooses to give its residents a penny for each soda can they recycle in an effort to promote environmental awareness. B. The country of Ravamolk enacts a policy to fine companies 20% of their earnings if the safety standards in their factories do not reach acceptable work conditions. C. A basketball team manages to sign a trio of famous basketball stars who then clamor for other players to come join their team to win a guaranteed championship. D. In an effort to make people eat healthier, the city of Bakersville tells its residents to eat wheat bread instead of white bread.
2
You have a part time job that pays $8 per hour. Your manager has asked you to work four extra hours on Friday night, but you already have plans for dinner and a movie with a friend on Friday night. Under what conditions will you choose to work on Friday night? Consider the economic way of thinking in answering this question; also assume that you are rational (even if you do not think you are rational) and can afford dinner and a movie.
Increasing Marginal Cost
a situation where the expense of producing one more unit of a good or service is greater than that of producing the previous unit
Optimal Quanitity
the amount that, when produced or consumed, results in the greatest possible net gain
Marginal Benefit
the benefit experienced from undertaking one more unit of an activity
Marginal Cost
the cost of producing one more unit of a good or service
Constant Marginal Cost
the situation where an additional unit of a good or service costs the same as each of the former units
Decreasing Marginal Benefit
the situation where the gain from an additional unit of a good or service is less than the gain from producing the previous unit