EXAM 1 STUDY GUIDE (Unit 1)

A

Dependencies between your own choices reflect the fact that: A. you have limited resources. B. resources are spread across varying markets. C. resources can be spread across time. D. society has limited resources.

B

When people make rational choices, they A. do not consider their emotions. B. weigh the costs and benefits of their options and act to satisfy their wants. C. behave selfishly. D. are necessarily making the best decision.

B

The interdependence principle states that your best choice today depends on all of the following EXCEPT A. decisions others are currently making. B. past decisions you have made. C. expectations about the future. D. other decisions you are currently making.

A

The opportunity costs of attending college include the: A. potential income that could be earned working. B. cost of room and board. C. cost of clothes to wear at school. D. effort and hard work.

C

Amanda Mendez goes to a local café and orders a sandwich. Her willingness to pay for that sandwich is $10. The price of the sandwich is $4. The cost to the cafe to produce that sandwich is $1. How much economic surplus does Amanda receive when she purchases the sandwich? A. $3 B. $4 C. $6 D. $10

A

Alan Patel is a college student living alone in a campus apartment. He finished cooking dinner when his friends text him to join them at the dining hall on campus for dinner. He now has to decide whether to eat the dinner he prepared or walk to campus to meet his friends at the dining hall. Alan should consider all the following costs when making this decision EXCEPT the A. money spent on the groceries he used to cook dinner. B. value he places on not eating dinner alone. C. amount of money he will spend at the dining hall. D. time it will take to go meet his friends and walk back.

A

In economics, what is meant by "optimal decisions are made at the margin?" A. The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior. B. The idea of the margin is that all economic decisions are made at the very fringes of society. C. The idea of the margin does not help compare trade-offs and is not relevant to decision-making. D. The concept of the margin was initially developed in 2012 by Professor Marginus; research is still being done on how it can be used for decision-making.

B

Instead of studying for an additional two hours for the economics final, Leann decides to watch a movie. Leann is making A. a decision that is not on the margin because she will see the entire movie. B. a rational decision if her marginal benefit from the movie is greater than her marginal cost. C. an irrational decision because studying is more important than watching a movie. D. a decision based on stated preference, rather than revealed preference. E. a rational decision if her marginal cost from the movie is greater than her marginal benefit.

8,6,4,2,1,3

Neal is a coffee drinker. At the local coffee shop, the price of a cup of coffee is $3. Neal's total benefits from drinking coffee are indicated in the accompanying table. Use this information to calculate Neal's marginal benefit of consuming each cup of coffee. a. The marginal benefit of the first cup is $ b. The marginal benefit of the second cup is $ c. The marginal benefit of the third cup is $ d. The marginal benefit of the fourth cup is $ e. The marginal benefit of the fifth cup is $ f. Neil should consume ___ cups of coffee per day.

C

Amy can study for an hour or spend that hour sleeping or going out for dinner. If she decides to study for the hour, the opportunity cost of the hour spent studying is A. studying, by revealed preference since this is the choice she opted for. B. sleeping and going out for dinner. C. sleeping or going out for dinner, whichever she would have preferred the most. D. going out to dinner because she must eat at some time. E. definitely going to sleep.

D

Economists assume that people's goals are to A. spend all of their income. B. do the minimum amount of work needed to survive. C. make as much money as possible. D. make themselves as well off as possible.

B

Economists assume that rational behavior is useful in explaining choices people make A. even though people rarely, if ever, behave in a rational manner. B. even though people may not behave rationally all the time. C. because individuals act rationally all the time in all circumstances. D. because irrational people do not make economic choices.

B

Economists convert costs and benefits into money equivalents by evaluating an individual's A. marginal benefits. B. willingness to pay. C. opportunity costs. D. sunk costs.

C

In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction. A. neither the buyer nor the seller B. only the seller C. both the buyer and the seller D. only the buyer

A

Opportunity cost arises from the fundamental economic problem of A. scarcity. B. unlimited resources. C. marginal costs. D. interdependence.

B

Ron is buying jeans online and has to decide how many to buy. He should buy an additional pair if the A. total benefit when purchasing one more pair is less than the total cost of the jeans. B. marginal benefit of the next pair is at least as high as the price of the jeans. C. total benefit when purchasing one more pair is at least as high as the total cost of the jeans. D. marginal benefit of the next pair is less than the price of the jeans.

D

The marginal cost of an additional worker is A. always equal to the cost from the first worker hired. B. always equal to the benefit of hiring the additional worker. C. the total cost of all workers hired. D. the additional cost of hiring one more worker.

C

The opportunity cost principle states that the true cost of something is the A. economic surplus you receive from getting it. B. least desired alternative you have to give up to get it. C. next best alternative you have to give up to get it. D. economic surplus you give up to get it.

D

Vincent Pearson makes dining tables, and he is trying to decide how many tables to produce. He can sell each dining table for $3,000. The cost of the first table is $1,000, for the second it's $1,500. For each additional table he produces, the marginal cost of each table increases by $500. How many dining tables should Vincent produce, and what is the total cost of his production? A. He will produce four tables at a cost of $12,000. B. He will produce six tables at a cost of $13,500. C. He will produce seven tables at a cost of $17,500. D. He will produce five tables at a cost of $10,000.

C, D, E

What factors into the opportunity cost for a decision? A. the sum of all benefits from all foregone alternatives B. the difference between the benefits of the first and second best choices C. benefits from the best foregone alternative D. time spent due to the decision E. actual financial cost of the decision

A

Diane Jacobs is a student studying economics and currently working on her class schedule for next semester. When she considers taking another economics course rather than taking a math class in the same time slot, she is acknowledging that dependencies exist A. between her own choices. B. between people or businesses in the same market. C. between markets. D. through time.

B

Diane is remodeling an apartment that she will rent out to a college student. The renovation is estimated to cost $6,150.$6,150. If Diane decides to install decorative crown molding in the apartment, the renovation is estimated to cost $6,700.$6,700. Assuming Diane chooses to install the crown molding, what is the marginal cost of this choice? A. $6,150 B. $550 C. $12, 850 D. $6,700

A

Economic models do all of the following except A. portray reality in all its details. B. answer economic questions. C. simplify some aspect of economic life. D. make economic ideas explicit and concrete.

A

In 2016, the top-selling pharmaceutical drug in the world was AbbVie's Humira, which is used for the treatment of several common, chronic conditions. The majority of its profits are derived from treatment of the most common diseases, but AbbVie also develops drugs for rare conditions. Why might AbbVie develop drugs for rare diseases instead of investing all of its resources toward drugs for common diseases? It is possible that A. the marginal principle may be guiding AbbVie in determining if it is worth producing drugs for rare diseases. Since it is developing and producing treatments for rare diseases, the marginal benefits must exceed the costs. B. the opportunity‑cost principle may encourage AbbVie to produce drugs for rare conditions, because the full benefits outweigh the costs. The company must be maximizing its total economic surplus. C. the interdependence principle may be guiding AbbVie to develop and produce drugs for rare conditions. Common chronic and rare conditions are often experienced by the same people, so AbbVie can easily produce drugs for both. D. framing effects may be enticing AbbVie to develop and produce drugs for rare conditions. Since these drugs are more expensive, AbbVie will make a large profit.

D

In addition to financial costs and benefits, assessing your willingness to pay allows you to convert _______ costs or benefits into their monetary equivalent. A. macroeconomic B. fictional C. imaginary D. nonfinancial

15

It is a beautiful afternoon, and Jose is considering taking a leisurely two-hour stroll through the park. There are several other activities Jose is considering doing instead. The value Jose receives from each of the activities is provided in the table. Alternative Activities Streaming a movie $5 Taking a nap $8 Chatting with his best friend $13 Reading a new book $15 What is Jose's cost of taking the stroll through the park? $____

A

Jonathan Mendez is deciding whether to study for his economics exam at a café or go to a concert with friends tonight. The cost of the concert ticket that he purchased yesterday is ____ in his opportunity cost and represents a _____ cost. A. not included; sunk B. not included; financial C. included; financial D. included; nonfinancial

B

Nerida Kyle can either commute to work using a bus or purchase a new car. The bus fare each way is $2. Nerida works five days a week for 50 weeks a year. Based solely on the benefit of avoiding the cost of her bus tickets, Nerida should purchase a car if the cost of the car is _____ than _____ per week. less; $10 less; $20 greater; $10 greater; $20

C, B

Please select the economic term that is best described by each statement below. There are limited resources to satisfy all of society's wants. A. business cycle B. trade-off C. scarcity D. entrepreneurship E. margins F. recession Comparing the benefits and costs of engaging in an activity. A. recession B. trade-off C. margins D. financial capital E. scarcity F. resources

F, A

Please select the economic term that is best described by each statement. People have limited resources. A. tradeoffs B. margins C. business cycle D. entrepreneurship E. recession F. scarcity Everything you do requires giving up something (time, money, etc.). A. tradeoffs B. budgeting C. financial capital D. scarcity E. recession F. margins

A

Sarah Sandoval is a coffee farmer trying to decide how many tons of coffee to produce. She can sell each ton of coffee for $1,500. The cost of producing her first ton of coffee is $300, and the second ton costs $500. Each additional ton of coffee costs $200 more to produce. How many tons of coffee should Sarah produce, and what is the total cost of her coffee production? A. She will produce seven tons at a total cost of $6,300. B. She will produce six tons at a total cost of $4,800. C. She will produce eight tons at a total cost of $8,000. D. She will produce nine tons at a total cost of $9,900.

A

Scarcity results from the fact that A. people's wants exceed the resources available to satisfy them. B. not all goals are desirable. C. the population keeps growing. D. there are no tradeoffs in human decision-making.

-5, Should, Sunk

The Core Principles of Economics — End of Chapter Problem Marah is deciding whether or not to open a lemonade stand. She expects to sell 20 cups of lemonade for $1 per cup. She already made a sign that cost her $10 and will have $15 worth of additional costs for cups and lemonade mix if she decides to open the stand. a. If Marah decides to open the lemonade stand, how much profit will she earn? ___ b. Based on this information, Marah ___ open the lemonade stand. A. Should B. Shound not c. The $10 spent on the sign represents a ____ cost. A. Labor B. Necessary C. Lost D. Sunk

A

The cost of your favorite coffee is $6.50 per cup at the coffee shop. The marginal cost of each cup you drink is _____. The first cup of coffee you drink gives you a marginal benefit of $8. The marginal benefit from the second cup is $6, $4 from the third, $2 from the fourth, and $0 from the fifth. You should drink _____ cups of coffee. A. $6.50; one B. $0; five C. $1; six D. $6.50; five

A

The cost-benefit principle states that the full set of _____ should be evaluated when making any choice. A. costs and benefits B. economic surpluses C. interdependencies D. opportunity costs

A,A

Use the cost-benefit principle to evaluate the following: a. You are about to buy a calculator for $10, and the sales-person tells you that the model you want to buy is on sale for $5 at the store's other branch, which is a 20 minute drive away. You should make the trip to the other branch if: A. Your cost of making the trip is less than $5 B. Your cost of making the trip is more than $5 b. You are about to buy a laptop for $1,000 and the sales-person tells you that the model you want to buy is on sale for $995 at the store's other branch, which is a 20 minute drive away. You should make the trip to the other branch if: A. Your cost of making the trip is less than $5 B. Your cost of making the trip is more than $5

C

Which of the following is the best definition of the opportunity cost of a decision? A. The sum of all benefits from all foregone alternatives. B. Actual financial cost of a decision. C. Benefits from the best foregone alternative. D. The difference between the benefits of the first and second best choices.

D

You have paid $100 for student season tickets to the football games at your university. It is halfway through the season, and the team has not won any games (this isn't happening at A&M!!). You are considering whether you will attend any future games this season. All of the following are costs or benefits you should consider when making this decision EXCEPT the A. cost of a hotdog and soda you will inevitably buy at a future game. B. time spent at the game rather than studying. C. $5 you will earn per game by selling the remaining tickets. D. frustration experienced from watching the team lose in previous games.

C

Your employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week. The wage rate for each of the first forty hours will continue to be the usual $15 per hour. In terms of dollars, what is the marginal benefit of working each hour of overtime? A. 15 B. Depends on the opportunity cost of your time C. $18 D. $3

D

_____ is a measure of how much your decision has _____ your well-being. A. Willingness to pay; improved B. Economic surplus; decreased C. Willingness to pay; reduced D. Economic surplus; increased

D

_____ is estimated by asking: "What is the _____ I am willing to pay to get this benefit (or avoid that cost)?" A. Opportunity cost; least B. Willingness to pay; least C. Opportunity cost; most D. Willingness to pay; most

B

It is a beautiful afternoon, and you are considering taking a leisurely stroll through the park. Your alternatives to walking are streaming a movie that you value at $5, taking a nap that you value at $7, or reading a new book that you value at $12. What is the opportunity cost to you of taking the stroll through the park? A. $5 B. $12 C. $0 D. $7

A

It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost. A. walk; less B. take an Uber; more C. take an Uber; less D. walk; more

D

John works eight hours per day. Today he has to decide whether to work overtime and stay one more hour in the office, or go back home and spend that hour studying for his economics exam. His company pays him $80$80 per day if he works eight hours, and $100 per day if he works nine hours. Assuming that, if John studies one more hour, his exam score increases from 75 to 80, what is John's rational decision? A. John decides to work overtime only if he values getting an 80 on his exam less than $100. B. John decides to work overtime only if he values getting a five point increase on his exam score more than $20.$20. C. John decides to work overtime only if he values getting an 80 on his exam more than $100. D. John decides to work overtime only if he values getting a five point increase on his exam score less than $20.

A

The cost-benefit principle will lead you to make unselfish decisions if you A. account for unselfish motivations. B. maximize monetary costs and benefits. C. pursue only decisions for which the benefits outweigh the costs. D. maximize economic surplus.

C

The price of coffee at a local coffee shop is $2.50. Cheryl is willing to pay $8 for her first cup of coffee each day. The marginal benefit to her of each additional cup of coffee falls by $2. How many cups of coffee should Cheryl purchase? A. Two B. One C. Three D. Four

D

When faced with a quantity decision, the economic surplus stops increasing when A. total benefits equal to total costs. B. marginal benefits exceed marginal costs. C. total benefits exceed total costs. D. marginal benefits equal marginal costs.

D, B

Which phrase best describes utility? Utility is A. the contribution of a particular good or service to GDP. B. the amount of money a consumer is willing to pay to gain a given amount of consumption. C. a measure of how useful a good or service is in acquiring income or wealth for a consumer. D. a measure of consumer satisfaction. How do economists measure utility? Economists A. use surveys to rate the usefulness of goods and services after they are purchased. B. use data such as prices and purchase information to measure utility. C. do not measure utility. It is a hypothetical measure used for modeling behavior. D. measure utility in a laboratory by analyzing the responses of volunteers.

D

Economists use the phrase "revealed preference" to mean A. What you would prefer to do if no one was watching. B. What you say you want to do. C. What a moral society reveals about what people should do. D. What you actually do when faced with a choice.

A

What do economists mean when they say behavior is "rational"? A. Individuals making choices which help them reach their goals. B. Individuals making choices to maximize their wealth. C. Individuals making choices entirely using logic. D. Individuals caring more about their own outcomes than others' outcomes. E. Individuals making choices that do not harm others.

D

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is trying to decide how many more episodes to watch. Kathleen should continue watching episodes unless the marginal A. benefit of watching another episode is positive. B. cost of watching another episode is positive. C. benefit of watching another episode exceeds the marginal cost. D. benefit of watching another episode is equal to the marginal cost.

C

The cost-benefit principle states that a decision should be pursued only if the A. benefits are positive. B. costs are greater than the benefits. C. benefits are greater than the costs. D. costs are negative.

C

An item has utility for a consumer if it A. is scarce. B. has a high price. C. generates enjoyment or satisfaction. D. is something everyone wants.

D

An opportunity cost is A. the dollar amount that is paid B. the revealed preference of the decision-maker's choice C. another term for all the sunk costs D. the benefits of the highest-valued alternative forgone

D

Carolyn Bates is a junior in college studying economics. She has created a new software application that applies the four principles of economic decision making to any potential decision that a user faces. She is considering leaving school after this academic year to pursue further development of her app. Carolyn should consider all of the following costs when calculating the opportunity costs of leaving college EXCEPT the A. potential future job security from her college degree. B. skills she may gain from her final year of economics courses. C. potential memories from her senior year of college. D. 90 credit hours she has already completed for her degree.

A

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is trying to decide how many more episodes to watch. Kathleen should continue watching episodes unless the marginal A. benefit of watching another episode is equal to the marginal cost. B. benefit of watching another episode is positive. C. cost of watching another episode is positive. D. benefit of watching another episode exceeds the marginal cost.

B

Consider the following statement: "Economists always put things into monetary terms; as a result, economics can most appropriately be called the study of money." Is this statement true or false? A. True, financial markets are the primary focus of economics. B. False, economists use monetary terms because they can be quantified and compared, but economics is better described as an approach to decision making. C. False, even though economists use money as a form of measurement, economics is better described as the study of financial markets. D. False, even though economists use monetary terms often, economics is better described as a governmental approach to improving market outcomes.

A

Dependencies between various people's choices reflect the fact that A. society has limited resources. B. you have limited resources. C. resources can be used across time. D. resources are spread across different markets.

3

Madeline spends all of her spare money on widgets, which cost $2$2 each, and gizmos, which cost $8$8 each. What is her opportunity cost if Madeline buys 12 widgets? ___ gizmos

B

Scarcity is A. the benefit people receive from consuming one more good. B. the economic problem of having limited resources to satisfy unlimited wants. C. the economic problem of prices rising over time. D. what people must give up to get something.

B

Sunk costs are costs that are incurred A. if a particular decision is not made. B. regardless of which decision is made. C. only for some decisions. D. if a particular decision is made.

C

The key to using the cost-benefit principle is to think about _____ aspects of a decision. A. neither financial nor nonfinancial B. only financial C. both financial and nonfinancial D. only nonfinancial

64,000, 110,000, 64,000, 90,000, 64,000, 70,000, 64,000, 50,000, 3

Aliyah is preparing to expand her IT consulting company. The current market rate for IT professionals is $58,000 per year. Each employee she hires will also require a computer and equipment that costs $6,000 per employee annually. Hiring more employees means that Aliyah can provide consulting services to more clients each year. Each client Aliyah has will pay her $10,000 per year. The number of clients Aliyah can take on is dependent on the number of workers she hires and is depicted in the accompanying table. Use this information to calculate the marginal cost and the marginal benefit of hiring each worker. a. The first worker's marginal cost is $ b. The first worker's marginal benefit is $ c. The second worker's marginal cost is $ d. The second worker's marginal benefit is $ e. The third worker's marginal cost is $ f. The third worker's marginal benefit is $ g. The fourth worker's marginal cost is $ h. The fourth worker's marginal benefit is $ i. Using the rational rule to maximize her economic surplus, Aliyah should hire ___ workers.

A, D, A, D

Consider each decision in the context of the four core principles of economics. a. Gilberto is deciding whether to vote in the next election. The four core principles of economics A. apply to this decision because Gilberto should consider the costs and benefits associated with voting. B. do not apply to this decision because voting behavior is studied in political science. C. apply to this decision because Gilberto's vote is a marginal vote that could determine the outcome of the election. D. do not apply to this decision because there is no cost involved in voting. b. Lee watches a beautiful sunset from the back porch of his house. The four core principles of economics A. apply because Janet is also watching the sunset. B. do not apply because no money is involved. C. do not apply because no decision is being made. D. apply because Lee could have been doing something else. c. Lilia is deciding whether to major in economics or philosophy. The four core principles of economics A. apply because Lilia should choose the major that provides the greatest economic surplus. B. do not apply because Lilia may change her major later. C. apply because economics majors earn higher salaries. D. do not apply because both programs cost the same and take the same amount of time to complete. d. Brendon and Jessica are deciding whether to purchase a second vehicle. The four core principles of economics A. apply because Brendon and Jessica want a second vehicleB. do not apply because there is good public transportation where Brendon and Jessica live. C. do not apply because Brendon and Jessica do not need a second vehicle. D. apply because Brendon and Jessica will have to give up something else to purchase the second vehicle.

C, C

During the economic downturn of 2008-2009, the unemployment rate increased to nearly 10%. At the same time, the price of college tuition and the number of college enrollees increased. a. Which statement best explains why more people enrolled in college during this time period even as the price of tuition increased? More people enrolled because A. of the social pressure people feel to go to college. Universities exploited this and increased the price of tuition without losing many students. B. of the bandwagon effect. When something becomes popular or trendy, ever more people are willing to pay high prices for it. C. if the next best option was unemployment, many individuals may have preferred to enroll in college and gain new skills in hopes of increasing their future employment prospects. D. if the next best option was unemployment, many individuals may have preferred to enroll in college and live off of student loans while waiting for the job market to improve. b. The core principle that best explains this is the A. cost-benefit principle B marginal principle C. opportunity cost principle

A

Economic models are typically based on the principle that people behave rationally. However, people do not always behave rationally. Which of the statements is NOT a reason why economists still consider their models valid, in spite of the irrationality of people? A. The existing models have been in place for so long, they are considered untouchable, the equivalent of an economic law. B. Models are made to simplify understanding, and irrational behavior is more difficult to generalize. C. People typically behave rationally in general. D. Despite the flaws, the models are still fairly accurate at predicting behavior.

58, 63, C

Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend's company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8. a. Calculate Jia's costs associated with going out to dinner with her friend. $___ b. Calculate Jia's benefits associated with going out to dinner with her friend. $___ c. Based on the information, Jia should A. go out to dinner with her friend B. eat at home C. go out to dinner with her friend

D

Joshua Murphy is planning on studying late into the night for his economics exam. He is contemplating how many coffees to buy tonight. Joshua should not buy an additional coffee during the evening if the marginal A. benefit of purchasing one more coffee exceeds the marginal cost. B. cost of purchasing one more coffee is positive. C. benefit of purchasing one more coffee is positive. D. benefit of purchasing one more coffee is less than the marginal cost.

A

Juan McDonald is willing to pay $600 for a new iPad. Apple (the producer of iPads) is selling a new iPad for $700. It costs Apple $400 to produce this iPad. A voluntary economic transaction between Juan and Apple _____ occur because ____ would be better off due to the transaction. A. will not; only Apple B. will; both Juan and Apple C. will; neither Juan nor Apple D. will not; only Juan

B, A, C, D

Khaled is a preschool teacher working at a public school, but he is considering quitting his job to start a daycare facility of his own. Indicate which of the four types of interdependency is most relevant to each factor in Khaled's decision. Use the market for daycare facilities as Khaled's market of interest. a. Khaled knows there are few daycare facilities in the area, but many families looking for daycare. This scenario is an example of dependencies A. Between markets B. Between people or businesses in the same market C. Between each of your individual choices D. Through time b. An increase in graduation rates for teachers saturates the market for preschool teachers. This decreases the wages of teachers. This scenario is an example of dependencies A. Between markets B. Between people or businesses in the same market C. Between each of your individual choices D. Through time c. If Khaled opens his own facility, he will be responsible for taxes, insurance, licensing, and facility upkeep, among other things. However, as a teacher Khaled will only need to keep up his teaching license. In addition, Khaled will not be able to take a long vacation in the summer if he runs a daycare center. This scenario is an example of dependencies A. Between markets B. Between people or businesses in the same market C. Between each of your individual choices D. Through time d. Khaled is up for a raise in the next 6 months at his teaching job. This scenario is an example of dependencies A. Between markets B. Between people or businesses in the same market C. Between each of your individual choices D. Through time

C

Marginal utility is the A. total satisfaction received from consuming a given number of units of a product. B. average satisfaction received from consuming a product. C. extra satisfaction received from consuming one more unit of a product. D. satisfaction achieved when a consumer has had enough of a product.

A

On Saturday morning, you rank your choices for activities, from most preferred to least preferred, in the following order: go to the library, work out at the gym, have breakfast with friends, and sleep late. Suppose you decide to go to the library. Your opportunity cost is A. working out at the gym. B. unclear because not enough information is given. C. working out at the gym, having breakfast with friends, and sleeping late. D. zero because you do not have to pay money to use the library.

B

Rose Riley's parents have booked and paid for a family trip to Aspen, Colorado, during her spring break. Rose's friends recently decided to drive to Destin, Florida, for spring break. Rose needs to decide whether to join her parents in Aspen or drive to the beach with her friends. The opportunity costs of joining her friends on the trip to Destin include each of the following EXCEPT A. the hotel costs she will split with her friends in Destin. B. the ski lift ticket her parents have already purchased for her. C. her parents' anger if she skips the family trip to Aspen. D. her contribution to gas money for the drive to Destin.

D

Samia has decided that with the two hours in between classes she can do one of 3 things. She has ranked her choices, from highest to lowest as, (1) chat with her friends, (2) study economics or (3) take a nap. The opportunity cost of chatting with her friends is A. the value of chatting with her friends. B. zero since she does not pay her friends to talk to her. C. the combined value of studying economics and taking a nap. D. the value of studying economics, the next best use of time.

C

Utility is the measure of A. the satisfaction all consumers should receive from consuming a good or service. B. surplus lost by producers when taxes are introduced to the market. C. the satisfaction a good or service gives to the consumer. D. surplus lost by consumers when taxes are introduced to the market.

A

Which of the following statements is true? A. Every person, no matter how rich or poor, is faced with situations that require trade-offs. B. Economics studies the trade-offs we are forced to make because resources are unlimited. C. Trade-offs do not apply when the consumers purchase a product for which there is excess supply, such as with a stock clearance sale.

B

You are thinking of going out to dinner at a restaurant with your friends. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $20. You value the restaurant meal at $20, and the time spent with your friends at $30. If you did not go out to the restaurant, you would eat at home using groceries that cost you $10. You should ____ to dinner with your friends because the benefit of doing so is _____ than the cost. A. go; greater B. not go; less C. not go; greater D. go; less

D

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. A. You value the Friday night activities more than the extra pay (in terms of marginal benefits, marginal costs, and your utility). B. You have already seen the movie that has been chosen for Friday night. C. You think the Friday night dinner will be expensive. D. You value the extra pay more than the Friday night activities (in terms of marginal benefits, marginal costs, and your utility).

A

Your friend remarks that longer movies are a better deal than shorter movies because the ticket price is the same in both cases. Therefore, the longer movie provides more benefit for the same cost as a shorter movie. Which of the following is the best argument against your friend's claim that longer movies provide more benefit than shorter movies? Based on the A. opportunity cost principle, the length of the movie does not matter as long as watching a movie is the best way to spend your time compared to other alternatives. B. cost‑benefit principle, the benefits of a longer movie exceed the costs when compared to a shorter movie. C. marginal principle, you should only continue to watch an additional movie if it is shorter than the first movie. D. interdependence principle, longer movies are affected by the market for shorter movies.