Econ 202 Chapter 3 Homework
You are considering renting a city apartment with 1,000 square feet for $1,300 per month. The monthly rent on a larger, 1,500-square-foot city apartment is $1,750. The marginal cost of renting an apartment with 500 additional square feet is $___________ (just number) per square foot per month.
.9
You have the option to play tennis or a round of golf (but not both). The tennis match requires you to take 2 hours off from work and the round of golf requires you to take 4 hours off from work. Playing tennis has value to you equal to $40, while golf has value to you equal to $115. Tennis courts are publicly available at no cost, but golf costs $40 per round. Suppose your wage from working is $88 per hour. The net benefit from playing tennis is $___________ and the net benefit from playing golf is $___________. Therefore, you should play ________ (tennis, golf)
24, 43, golf
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 $9,500 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 $20 per hour. What is the difference in the net benefit from becoming the department head? The change in net benefit is $____________. (just number) To optimize, you ___________ (should/shouldn't) become a department head.
5,500, should
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 $482. If the additional revenue (the marginal revenue) during the last hour is $542, the profit earned during the last hour of operation will be $ _____. If the additional revenue during the last hour is $382, the profit earned during the last hour of operation will be $______. If the additional revenue (the marginal revenue) from staying open until 10.00 p.m. is $482 the profit earned during the last hour of operation will be $________
60, -100, 0
If opportunity cost were to suddenly increase, total cost would A. decrease and net benefit would decrease. B. decrease and net benefit would increase. C. increase and net benefit would increase. D. increase and net benefit would decrease
increase and net benefit would decrease
When optimizing for total value, opportunity cost must be ___________ ________ (added to, subtracted from) total cost. Assuming __________ (varying, equal) benefits, the lowest cost option is the optimal choice.
added to, equal
Suppose you have just landed a job near the center of a city and you now need to decide where to live. If you live close to the city center, your round-trip commute will be 15 minutes. If you live in the distant suburbs, your round-trip commute will be 60 minutes. There are lots of workers like you who work downtown. Since there are only a limited number of apartments near the city center, these apartments will be allocated based on ________ (only the costs, only the benefits, both the costs and benefits) that you face. This process is known as ____________________ ("more bang for your buck, "optimization, differentiation.)
both the costs and benefits, optimization
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. A. Neither typeNeither type of optimization, since he is considering the total benefits of alternatives. B. Optimization in differencesdifferences, since he is not making marginal comparisons. C. Both typesBoth types of optimization, since he is not considering the net benefits of alternatives. D. Optimization in levels, since he is comparing the net benefits between alternatives. E. Optimization in differences, since he is calculating the change in net benefits between alternatives.
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. A. Optimization in differences, since she is calculating the change in net benefits between alternatives. B. Optimization in levels, since she is comparing the net benefits between alternatives. C. Optimization in levels, since she is making marginal comparisons. D. Both types of optimization, since she is not considering the total benefits of alternatives. E. Neither type of optimization, since she is considering the net benefits of alternatives.
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. A. Optimization in levels, since she is comparing the net benefits between alternatives. B. Both types of optimization, since she is considering the net benefits of alternatives. C. Optimization in differences, since she is calculating the change in net benefits between alternatives. D. Optimization in differences, since she is making marginal comparisons. E. Neither type of optimization, since she is not considering the total benefits of alternatives.
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. A. Neither type of optimization, since she is not considering the net benefits of alternatives. B. Optimization in differences, since she is making marginal comparisons. C. Optimization in differences, since she is comparing total benefits between alternatives. D. Both types of optimization, since she is considering the total benefits of alternatives. E. Optimization in levels, since she is comparing the net benefits between alternatives.
optimization in levels, since she is comparing the net benefits between alternatives
Optimization is the process that describes __________. A. the choices that businesses make. B. how to obtain relevant data. C. how to maximize wealth. D. the budgeting process for firms. E. the production of resources.
the choices that businesses make
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 ___________. A. only the price of each couch. B. only the marginal benefit of each couch. C. the indirect costs of traveling to the furniture store and the opportunity cost of your time required to shop. D. the direct costs of the price of each couch and the cost of having each couch moved to your apartment. E. the direct costs and the indirect opportunity cost of your time required to shop 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. a. the price of the couch b. the fuel cost of traveling c. the opportunity cost of your time d. the cost of having the couch moved
the direct costs and the indirect opportunity cost of your time required to shop, the opportunity cost of your time
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? A. The total cost of commuting from any given distance to work will increase because the indirect cost of the commute will rise. B. The total cost of commuting from any given distance to work will reduce because the direct cost of the train ticket will fall. C. The total cost of commuting from any given distance to work will reduce because the indirect cost of the commute will fall. D. The total cost of commuting from any given distance to work will increase because the direct cost of the train ticket will rise. How will this result impact people as they decide how close to live to the city where they work? They will be: a. more willing to locate farther from the city b. more likely to locate closer to the city c. unaffected by this when making location decisions
the total cost of commuting from any given distance to work will reduce because the indirect cost of the commute will fall, more willing to locate farther from the city
Optimization in levels examines ___________, while optimization in differences analyzes ____________. A. total benefits of alternatives; net benefits of alternatives. B. total net benefits of alternatives; the change in net benefits. C. total net benefits of feasible alternatives; total net benefits of infeasible alternatives. D. total benefits of alternatives; total costs of alternatives. E. marginal benefits of alternatives; the change in marginal benefits.
total net benefits of alternatives; the change in net benefits