LC1: LearningCurve - Ch. 1: The Core Principles of Economics

You make a clay pot for $10 and sell it to a customer for $40. What is your economic surplus associated with the transaction?

$30

Which of the following is NOT true of opportunity costs? - All nonfinancial costs are opportunity costs. - Some out-of-pocket costs are opportunity costs. - Not all out-of-pocket costs are real opportunity costs. - Opportunity costs do not always involve out-of-pocket costs.

All nonfinancial costs are opportunity costs.

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 cost-benefit principle

When someone weighs the pros and cons of a particular decision, they are taking into account the _____ principle.

cost-benefit

Hiring another worker is beneficial when the marginal benefit of hiring one more worker _____ the marginal cost, meaning that hiring another worker _____ economic surplus.

exceeds; increases

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.

opportunity cost

Karen is trying to decide how many workers she should hire at her new restaurant. The table below shows Karen's weekly costs and benefits based on the number of staff she hires. How many workers will get her the most economic surplus?

six

Amancio is going into his fourth year of school when he is offered a prestigious position at a software company. Instead of applying the opportunity cost principle to see if he should quit school and take the job, he decides to stay in school, because he has already spent so much time and money on furthering his education. Amancio's hasty decision has been negatively affected by:

sunk costs.

Every choice you make affects the resources available for every other one of your decisions. This is a fact that best describes which of these interdependencies?

Dependencies between your own choices

Which of these is NOT one of the four core principles of economics? - Opportunity cost - Interdependence - Marginal - Framing

Framing

Manzo produces shirts and jeans. His production possibility frontier for a particular amount of time is displayed below. What is the opportunity cost of producing an additional shirt?

Half a pair of jeans

_____ is the difference between the consequences of making a choice and the consequences of the next best alternative.

Opportunity cost

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 marginal principle

Nasser owns a business that produces t-shirts, but he is struggling with the dilemma of how many shirts to produce, so he begins by asking himself if he should produce one more shirt. Which economic principle is exemplified by this situation?

The marginal principle

You are considering starting a sandwich shop, but are comparing that to the idea of staying at your current job instead. Which economic principle are you taking into account?

The opportunity cost 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 an hour of her time is more valuable to her than her hourly pay

Which of these best describes when starting a business is a good idea? - When financial profits are large enough to offset the cost of the income you forgo - When financial profits can be obtained without incurring costs - When opportunity costs are very high since it reflects your big opportunity - When financial profits are larger than any sunk costs

When financial profits are large enough to offset the cost of the income you forgo

Fulton is trying to decide how many workers he should hire at his new restaurant. The table below shows Fulton's weekly costs and benefits based on the number of staff he hires. How many workers should he hire?

five