477 test 1

rational rule

If something is worth doing, keep doing it until your marginal benefits equal your marginal costs

a baker makes 15 cakes a day, the bakery decides to hire a second baker who only bakes 9 cakes a day who will use the kitchen when the first baker does. What is this an example of?

diminishing marginal product

grapes become more expensive, why might this be?

grape production is the same, but wine production has gone up, which means more grapes are needed

if US raised tariffs on Chinese imports, the us market for these Chinese imports would...

have an increase in price

opportunity cost

highest valued alternative that must be given up to engage in an activity

rational buyer

keeps buying a product until marginal benefit equals price

market equilibrium

quantity demanded equals quantity supplied

when faced with a quantity decision, the economic surplus is always maximized by following the

rational rule

diminishing marginal product leads to

rising marginal costs for a seller

calculate marginal benefit

subtracting marginal cost from marginal benefit. ex: Marginal net benefit of the first drink is $13 ($20 - $7)

price of coffee is $3 but Cheryl is willing to pay $6 each day. The marginal benefit to her of each cup of coffee falls by $2. How many cups of coffee should Cheryl purchase?

2

opportunity cost principle

next best alternative you have to give up to get it

estimate willingness to pay quantifies ___costs or benefits associated with a choice

non-financial

what is a factor that will not shift supply?

price of the product

economic surplus

total benefit minus total costs arising from the decision

does price cause movement along curves NOT shifts?

true

shifts in market demand can result from a change in

types and number of buyers

rising marginal costs imply

upward sloping supply curve

cost benefit principle

benefits are greater than the costs