Micro Econ Ch.1

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should _____ to dinner with your friend because the benefit of doing so is _____ than the cost.

Go; Greater

Nissan manufactures sedans and pickup trucks. As one of Nissan's economists, you're in charge of ensuring efficient management of costs. At one manufacturing plant, if Nissan devotes all of its resources to manufacturing sedans, it can produce 480,000 sedans per year. If Nissan devotes all of its resources to manufacturing trucks, it can produce 240,000 trucks per year. What is Nissan's opportunity cost of producing one sedan at this manufacturing plant?

Half Truck

Nerida could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week.

Less; $150

The ____ suggests that decisions about quantities are best made incrementally.

Marginal Principal

Samsung Electronics uses its resources to produce tablet computers and cell phones. The _____ of manufacturing more phones is manufacturing fewer tablets, which Samsung can illustrate with its _____.

Opportunity cost; Production possibility frontier

What is the difference between a straight line ppf and a curved ppf.

A straight-line PPF represents constant opportunity costs between two goods. A bowed-outward PPF represents increasing opportunity costs.

Nissan manufactures sedans and pickup trucks. As one of Nissan's economists, you're in charge of ensuring efficient management of costs. In the past, if Nissan devoted all of its resources to manufacturing sedans, it could produce 480,000 sedans per year at one manufacturing plant. If Nissan devoted all of its resources to manufacturing trucks, it could produce 240,000 trucks per year. A new production technique now allows Nissan to produce either 600,000 sedans or 360,000 trucks per year. How would Nissan's production possibilities frontier reflect this new production technique?

An outward shift of the production possibilities frontier.

The key to using the cost-benefit principle is to think about _____ aspects of a decision.

Both financial and nonfinancial

In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction.

Both the buyer and the seller

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.

D. the additional cost of hiring one more worker.

Which of the following scenarios involves no opportunity cost? A. It's Friday night and you stay up late talking and hanging out with your friends. B. You eat lunch with the chemistry club, which is giving out free pizza for lunch to all who come to their table to get it. C. Naomi, age 8, is at a bookstore and chooses to buy a book about a young wizard instead of buying a math textbook that she would probably never open. D. Chez Moi and Chez Nous, two premiere French restaurants with three Michelin stars, both offer you a full-time sous chef job at the same salary. You are ecstatic because you know it is a win-win scenario and choose to work for Chez Nous. E. All of these scenarios have an opportunity cost.

E. All of these scenarios have an opportunity cost.

The study of economics arises because of the necessity of choice, and the necessity of choice arises because of the fundamental problem of:

Scarcity

Gabriella starts using a new baking technique, and she can now do twice as much of everything. In a single day, Gabriella can now bake 10 muffins or 8 cookies, rather than the 5 muffins and 4 cookies she could previously bake. Gabriella's production possibility frontier has _____, and her opportunity cost of making cookies _____.

Shifted right; is unchanged

At a company meeting, someone suggests that Samsung would be better off if it uses its resources to manufacture 25 million phones and 1.75 million tablets. As one of Samsung's analysts, how do you explain the feasibility of the suggestion to the other team members in your company? (Point = outside the ppf)

The combination is currently unattainable but could be possible with increased production capacity.

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?

The opportunity-cost principle

Nissan manufactures sedans and pickup trucks. As one of Nissan's economists, you're in charge of ensuring efficient management of costs. At one manufacturing plant, if Nissan devotes all of its resources to manufacturing sedans, it can produce 480,000 sedans per year. If Nissan devotes all of its resources to manufacturing trucks, it can produce 240,000 trucks per year. What is Nissan's opportunity cost of producing one truck at this manufacturing plant?

Two Sedans

What factors into the opportunity cost for a decision?

benefits from the best foregone alternative actual financial cost of the decision time spent due to the decision