Eco Ch 1

All else equal, relative to a person who earns minimum wage, a person who earns $30 per hour has:

a higher opportunity cost of taking the day off work.

The Cost-Benefit Principle indicates that an action should be taken if, and only if:

its benefits exceed its costs.

Jack has a ticket to see Daughtry for which he paid $30 yesterday. He takes an unpaid day off from work to get ready for the concert. When he arrives at the concert, five different people offer him $70 for his ticket. Jack decides to keep his ticket. At the time he makes this decision, his opportunity cost of seeing Daughtry is:

$70

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:

0

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:

5

Suppose the cost to Tim of a third glass of soda is zero because he's at a restaurant that gives free refills. According to the Cost-Benefit Principle Tim should: a) drink a third glass of soda b) drink a third glass of soda if the benefit of doing so is positive. c) drink a third glass of soda if his benefit from drinking his second glass of soda was positive d) not drink a third glass of soda

Drink a third glass of soda if the benefit of doing so is positive

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:

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

The marginal benefit of an activity is the:

extra benefit associated with an extra unit of the activity.

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.

economic surplus; $3,000

Economics is best defined as the study of

how people make choices in the face of scarcity and the implications of those choices for society as a whole.

Which branch of economics is most likely to study differences in countries growth rates?

macroeconomics

The extra cost that results from carrying out one additional unit of an activity is the_____of the activity

marginal cost

If all the world's resources were to magically increase a hundredfold, then:

people would still have to make trade-offs

Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. The opportunity cost of going to the beach is:

the Value she places on seeing the movie

According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if:

the benefits of studying for an additional hour exceed the costs of studying for an additional hour.

Microeconomics differs from macroeconomics in that microeconomics focuses on:

the choices made by individuals and the implications of those choices

If one fails to account for implicit costs in decision making, then applying the cost-benefit rule will be flawed because:

the cost will be understated

The opportunity cost of an activity includes the value of:

the next-best alternative that must be forgone

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:

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

Economist recognize that because people have limited resources

they have to make trade-offs

A rational person is someone:

with well-defined goals who tries to fulfill those goals as best as he or she can.