Microeconomics Chapter 1

You had to pay $600 (non-refundable) for your meal plan for Fall semester, which gives you up to 150 meals. If you eat only 100 meals, your marginal cost for the 100th meal is:

$0

You save $10 on gas every week since you live close to the bus stop. You have class five days a week. What is your average benefit per day for living close to the bus stop

$2

If Jane works for 6 hours she can rent 12 apartments, and if she works for 7 hours she can rent 15 apartments. The marginal benefit of the 7th hour of Jane's work equals

3 apartments.

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck, but she finds one for $12,000. Her __________ is __________.

economic surplus; $3,000

The principle of scarcity applies to

everyone—consumers, firms, governments, and nations.

The marginal benefit of an activity is the:

extra benefit associated with an extra unit of the activity

Economics is best defined as the study of

how people make choices under the conditions of scarcity and the results of those choices.

The cost-benefit principle indicates that an action should be taken:

if the extra benefit is greater than or equal to the extra costs.

Last year interest rates fell. The field of economics that would be most concerned with this is:

macroeconomics.

Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:

an economic problem because Chris has only one hour during which he can study or work out.

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. (Assume that you would not have been willing to pay any more than $35 for this concert.) Your boss called and she is looking for someone to cover a shift on Saturday at the same time as the concert. You will have to work 4 hours and she will pay you time and a half, which is $9/hr. What is the opportunity cost of going to the concert?

$36

Amy is thinking about going to the movies tonight. A ticket costs $7 and she will have to cancel her dog-sitting job that pays $30. The cost of seeing the movie is

$37

If the marginal costs of 1, 2, and 3 hours of talking on the phone are $50, $75, and $105 respectively, then the total costs are of 1, 2 and 3 hours of talking on the phone are

$50, $125, and $230 respectively.

Jack has a ticket to see Bo Bice for which he paid $30 yesterday. He takes an unpaid day off from work to get ready for the concert. When he arrives at the concert, five different people offer him $70 for his ticket. Jack decides to keep his ticket. The cost to Jack of seeing Bo Bice is

$70

Which of the following would not be analyzed in microeconomics?

Whether the federal budget should always be balanced.

Relative to a person who earns minimum wage, a person who earns $30 per hour has:

a higher opportunity cost of taking a day off

By convention, there are two major divisions of economics, called

microeconomics and macroeconomics

The study of individual choices and group behavior in individual markets defines:

microeconomics.

One thing that distinguishes normative principles from positive principles is that

normative principles tell us how people should make economic decisions, and positive principles tell us how people actually do make decisions