econ 201 ch 1

If a buyer's willingness to pay for an item is $10, and the buyer purchases the item for $8, what is the buyer's economic surplus?

$0 $10 correct: $2 $8

Which of these principles is not helpful when you face a decision with an either/or question?

the opportunity cost principle the cost-benefit principle correct: the marginal principle nonfinancial costs

When applying the opportunity cost principle, why is it important to ask, "Or what?"

to determine how your competitors will respond to your decision to break your decision down into simpler choices to consider what other decisions might affect your best choice correct: to determine your next best alternative

_____ is a common measuring stick that allows different people to compare a wide variety of costs and benefits, taking into account both financial and nonfinancial aspects of a decision.

Correct: Money Economic surplus Framing Opportunity cost

Angela owns a software company with 10 employees. Because she is not sure whether an 11th employee would improve her economic surplus, she hires another employee and notices that her total costs have increased by $1,250 and her total revenue has increased by $1,000. Which of these would be the best course of action for Angela?

correct: Let the 11th employee go, or do not replace the next employee who quits. Keep the 11th employee, but do not hire any more employees. Hire another employee. Hire 11 more employees.

When a person makes a decision following the cost-benefit principle, they generate:

correct: economic surplus. financial benefits. sunk costs. scarcity

Evie, a receptionist at a car dealership, asks herself the question, "Should I go back to school, or should I continue to work at the dealership?" The fact that she is comparing the idea of going to school with her next best option indicates that she is applying the _____ principle.

correct: opportunity cost marginal cost-benefit interdependence

You are trying to decide if you should buy a warmer coat but realize that the answer to this question will depend on whether you are taking a trip to Canada next month. Which economic principle is taken into account?

correct: the interdependence principle the marginal principle the cost-benefit principle the opportunity cost principle

Your willingness to pay for a pair of jeans is $50. According to the cost-benefit principle, when should you avoid buying a pair of jeans and instead opt to keep your money?

correct: when the price of the jeans exceeds $50 when the price of the jeans is less than $50 when the price of the jeans is equal to $50 when the price of the jeans is equal to or less than $50

The _____ principle says that the true cost of something is the next best alternative that you must give up to get it.

cost-benefit marginal correct: opportunity cost interdependence

Ayalon owns a fast food restaurant that is open 18 hours a day. He is considering the idea of having his restaurant remain open 24 hours a day, but he realizes that the success of this plan may be affected by the changing hours of his competitors. Ayalon is taking into account the _____ principle.

cost-benefit opportunity cost marginal correct: interdependence

Which of these is NOT one of the four core principles of economics?

interdependence marginal opportunity cost correct: framing

You have decided that you will buy tacos, but you are still trying to decide how many tacos you should buy. Which economic principle are you taking into account?

the cost-benefit principle the interdependence principle the opportunity cost principle correct: the marginal principle

You are weighing the cost of a cup of coffee against the satisfaction you will obtain from the coffee. Which economic principle are you taking into account?

the interdependence principle the marginal principle the opportunity cost principle correct: the cost-benefit principle

Agron is struggling to determine how many hours he should work. Which of these principles should he use first in order to break the issue down into the simpler question, "Should I work one more hour?"

the interdependence principle the opportunity cost principle the cost-benefit principle correct: the marginal principle

Roshan is unsure about whether she should work more hours, so she gradually increases the hours that she works each week. When should she stop working more hours?

when her hourly pay is more valuable to her than an hour of her time correct: when an hour of her time is more valuable to her than her hourly pay when an hour of her time is more valuable to her than her yearly pay when her yearly pay is more valuable to her than an hour of her time

You are willing to pay $4 for a cheeseburger. According to the cost-benefit principle, when should you buy a cheeseburger?

when the cost is greater than $4 when the cost is greater than or equal to $4 when the cost is less than $4 correct: when the cost is less than or equal to $4