ECON 2010 CH 1

How do you quantify the enjoyment you get from a purchase?

Determine the maximum you are willing to pay for the item

You are launching a new consulting business and you need to decide how many employees to hire. Applying the marginal principle, what questions should you consider?

Should I hire one more employee?

What should you do as a business owner if you want to predict the decisions that one of your competitors will make?

Use the someone's else's shoes technique

How is the cost-benefit principle applied to buying a meal for a friend?

You earn a nonfinancial benefit from the enjoyment of treating your friend

You are willing to pay full price for an ew shirt, but you end up finding it half-off from an online retailer. Applying the cost-benefit principle, determine what has changed.

Your cost has decreased, but your benefit remains the same.

Edward charges $100 to landscape his neighbors' lawns. His neighbors should hire Edward if the marginal ______ of having their lawn landscaped is _______ than $100.

benefit, greater

You take a job driving for Lyft. It's a slow night and you are trying to decide whether to continue working or go home. You should....

continue working until the marginal beneift you receive from working additional time equals your marginal cost of working additional time.

You have to try and persuade your parents to go to your graduations because your brother's talent show is scheduled for the same time. This BEST exemplifieis which interdependencies?

dependencies between people

What might change the best choice you have?

expectations about the future

_____________ is the extra benefit associated with one extra unit.

marginal benefit

In the podcast, the authers use the interdependence principle to illustrate how to an increase in interest rates can lead to

more parents returning to the labor market

"Should I go back to school, or should I continue to work at my full time job?" This statement is applying which principle

opportunity cost principle

What best describes what people should base their decisions on?

opportunity costs

Competing against other potential employees for a job is an example of the _____ set of interdependencies.

second

You buy an expensive mattress on clearance which is nonreturnable. After a few weeks, you realize it's very uncomfortable and you are not getting a good night's sleep because of the mattress. Thinking like an economist, you should ignore the ________ costs and get a new mattress.

sunk

You are offered a position at FedEx. You should take the job if ______.

the benefits of taking the job at FedEx are more than the costs of taking the job

Which principle, if followed correctly, causes people to avoid making choices that reduce their economic surplus?

the cost-benefit principle

One example cited in the podcast of a factor that may cloud your decision making is

the framing effect

When applying the Opportunity Cost Principle, you consider

the trade-offs of your decisions

Why do economists use the someone else's shoes technique?

to forecast other people's decisions