ECON 494 - Ch 1

If Sam gets $450 worth of benefit from growing 300 tomatoes in his garden, then his average benefit of growing a tomato is:

$1.50 450/300

Suppose Anaya owns a small business knitting scarves. The table below shows the number of scarves that Anaya can knit each week along with her total cost. If she knits 4 scarves per week, then her average costs is $____ per week. quantity total cost 1 8 2 18 3 30 4 44 5 60

$10

Suppose you are considering whether to go to your 8 am economics class. If you do not go to class you can either sleep an extra hour, which you value at $10, or you can go to the gym, which you value at $7. Your opportunity cost of going to class is ______.

$10 The opportunity cost of an action is the value you place on the next best alternative

Suppose Anaya owns a small business knitting scarves. The table below shows the number of scarves that Anaya can knit each week along with her total cost. If she knits 4 scarves per week, then her average costs is $____ per week. quantity total cost 1 ------------ 8 2 ----------- 18 3 ----------- 30 4 ----------- 44 5 ----------- 60

$11

You are considering whether to go to see a movie. The movie lasts 2 hours and tickets are $15 each. Assuming there are no other costs associated with going to a movie, your opportunity cost of going to the movie is

$15 plus the value of whatever else you would have done for those 2 hours

If it costs Sarah $400 to make 200 Christmas cookies, then her average cost of making a Christmas cookie is

$2 400 / 200 = 2

Suppose you plan to buy a new pair of running shoes. To buy them online, the pair costs $9. However, the value you had placed on the buying the shoes online is $12. Based on this information, your economic surplus from buying the shoes online is _____.

$3 12-9

You are either going to spend the evening studying at the library (an activity you value at $18) or you are going to go out to dinner with your friends (where you will spend $16 on food). What is your opportunity cost of going out to dinner?

$34 18 + 16 = 34

Suppose you are considering whether to spend an additional hour studying for your economics midterm tomorrow. If you do not study you can either surf the web, which you value at $5, or you can talk to your roommate, which you value at $4. Your opportunity cost of studying for an additional hour is:

$5 The opportunity cost of an action is the value you place on the next best alternative

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you only eat 1 meal, your average cost for a meal is

$600

Aarav wants to read "The Wealth of Nations", by Adam Smith. He can either buy a copy at the bookstore near his house for $15, or bike across town and check it out from the public library. There is no charge to check books out of the library, but the hassle of biking across town would cost Aarav $7. What is Aarav's economic surplus from checking the book out of the library instead of buying it at the bookstore?

$8 The benefit of checking out the book from the library instead of buying it at the bookstore is $15, and the cost is $7. Thus, economic surplus is $15 - $7 = $8.

You are considering whether to go to lunch with a friend. Lunch will take about an hour and will cost $9. Assuming there are no other costs associated with going to lunch, the opportunity cost of going to lunch is

$9 plus the value of the hour you spend at lunch

The table below shows how your daily parking charges, C, depend on the number of hours, H, you park each day. If your daily parking charges are a linear function of the number of hours you park, and you graph this line with charges on the vertical axis and hours on the horizontal axis, then the vertical intercept will be _____ and the slope will be _____. Charges($/day) Hours(hours/day) 2 2 3 4 4 6 5 8

1, 0.5 C = 1 + (0.5)H 3 = 1 + (0.5)(4)

If the equation M = 20 + 12H is graphed with M on the vertical axis and H on the horizontal axis, then the slope will be:

12 y=mx+b

The table below shows how your daily parking charges, C, depend on the number of hours, H, you park each day. If your daily parking charges are a linear function of the number of hours you park, and you graph this line with charges on the vertical axis and hours on the horizontal axis, then the vertical intercept will be _____ and the slope will be _____.

1; 0.5

If the equation M = 20 + 12H is graphed with M on the vertical axis and H on the horizontal axis, then the vertical intercept will be:

20

You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon?

22 10 + 12 = 22

Suppose you need to buy a new cell phone charger. You can buy one at a nearby store for $10, or you can buy one online for $8.50, but it'll take 2 days to arrive. If the cost to you of waiting two days to get the charger is $1, then your economic surplus from buying the charger online instead of at the store is:

50 cents The benefit of buying the charger online is that it's cheaper, and the cost is that you'll have to wait 2 days. Economic surplus is the benefit of buying the charger online minus the cost, or $1.50 - $1 = 50 cents.

The table below shows how your weekly income, M, depends on the number of hours, H, you work each week. If there is a linear relationship between the number of hours you work each week and your weekly income, and if you graphed this line with income on the vertical axis and hours on the horizontal axis, then the vertical intercept would be _____ and the slope would be _____. income($/week) Hours(/week) 150 10 250 20 350 30 450 40

50; 10

The accompanying table shows how total donations, average donations, total labor costs, and average labor costs vary depending on the number of employees State U hires for its fundraising activities: # T.D. A.D. T.L.C. A.L.C. 1: 30,000(TD) 8,000 (ALC) 2: 42,426(TD) 17,000(TLC) 3: 17,321(A) 27,000(TLC) 4: 60,000(TD) 9,500(ALC) 5: 13,416(AD) 50,000(TLC) The president of State U decides to hire fundraising employees as long as their average benefit exceeds their average cost. This results in ______ employees being hired and a net benefit (total donations minus total labor costs) of ______

5; $17,080

You are considering whether to take a few days off work to visit your best friend who lives in New York. You estimate that airfare plus other travel expenses will cost $575. In addition, you will have to use two vacation days, which you value at $100 each. Assuming there are no other costs associated with your trip, what is the opportunity cost of visiting your friend?

775 575+100(2)

Kimberley is studying for her math exam. If she studies for 5 hours she knows she'll get an 80, and if she studies for 6 hours, she knows she'll get a 90. Thus, the marginal benefit of the 6th hour of studying is ______.

10 points

You earn $12 an hour at your job, and you earn $20 per week from your investments. If you work 40 hours per week, then your total weekly earnings will be equal to _____ dollars

500 12(40)+20

In order to use your local pool, you have to pay $15 per year, plus an additional $2 every time you go. If N is the number of times you use the pool each year, and F is the total dollar amount you pay to use the pool each year, then which of the following equations best describes this situation?

F = 15 + 2N

A formula is a mathematical expression that describes the relationship between two or more variables.

False

Suppose you pay $35 to reserve a camp site at a local state park. The rules specify that you can only receive a refund if you cancel your reservation 2 weeks before your trip. Several days before your trip, you learn that it's supposed to rain the whole time you had planned to camp, and you are having second thoughts about going. Should the $35 you paid for the camp site factor into your decision about whether to go camping?

No Several days before your trip, the $35 you paid for the camp site is a sunk cost (regardless of whether you go camping, the $35 is gone). So the $35 you paid for the camp site should not factor into your decision about whether to go camping.

Every time you go to the grocery store, you try to wait in the shortest line. But the lines always seem to be roughly the same length. Why?

Other people are trying to choose the shortest line too.

A study that deals with the salaries of university professors would be considered

microeconomics

According to the Cost-Benefit Principle, an individual or society should

take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs

In the graph of a straight line, the vertical intercept is the value taken by the dependent variable when the independent variable is equal to _____.

zero

Suppose a parking garage charges a fee of $1 plus an additional 50 cents for every hour you park there. If C is your total cost of parking at the garage in dollars, and H is the number of hours you park in the garage, then which of the following equations best represents this situation?

C = 1 + 0.50H

The table below shows how the annual fee, F, to use your local pool depends on the number of days, D, you use the pool each year. If the annual fee is a linear function of the number of days you use the pool, then which equation describes the relationship between F and D? Fee ($/year) Days (number/year) 30 10 45 20 60 30 75 40

F = 15 + (1.5)D

Suppose that each police officer hired by the City of Gotham generates an average benefit to the community of $500 per week, and the average salary of police officers is $600 per week. Should the City of Gotham hire more or fewer police officers?

It's impossible to say Whether the City of Gotham should hire more or fewer police officers depends on the marginal benefit and marginal cost of an additional police officer, but the question only gives information on average benefit and average cost.

You earn is $12 an hour at your job, and you earn $20 per week from your investments. If H is the number of hours you work each week, and M is your total weekly earnings in dollars, then which of the following equations best describes this situation?

M = 20 + 12H

Suppose you pay $75 to buy a ticket to see one of your favorite bands next month. When the day of the concert rolls around, should the cost of the ticket figure into your decision about whether to go to the concert (assume you have no way to sell your ticket to anyone else)?

No On the date of the concert, the $75 you paid for the ticket is a sunk cost (regardless of whether you go to the concert, the $75 is gone). So the cost of the ticket should not enter into your decision about whether to go.

Suppose you're trying to decide what to cook for dinner. Both the chicken and the salmon you have in your fridge are about to go bad, and whichever one you don't eat tonight, you'll have to throw away. In deciding which one to cook, should it matter to you that the salmon was slightly more expensive than the chicken?

No The amount you spent on the food is a sunk cost and shouldn't factor into your decision. You should just cook whichever one sounds better to you

Suppose you plan to buy a new pair of cleats and a new pair of shin guards at your local sporting goods store. You have a 10% off coupon for the cleats and a 50% off coupon for the shin guards. If soccer cleats are $70 and shin guards are $10, and the store will only accept one coupon per customer, then what should you do?

Use the 10% off coupon for the cleats because it's a bigger dollar savings.

For Buzz, the benefit of drinking an additional cup of coffee is $3. If a cup of coffee costs $1.50, and if Buzz has to use $1 worth of his time to go buy the coffee, should Buzz drink another cup of coffee?

Yes The benefit to Buzz of drinking another cup of coffee is greater than the cost ($3 > $2.50)

Economists believe that scarcity is

a fundamental fact of life for everyone

Economists believe that scarcity is

a fundamental fact of life for everyone.

The total cost of carrying out n units of an activity divided by n is the activity's ________ cost

average

Dividing the total cost of undertaking n units of an activity by n reveals the

average cost

Learning more about economic models

can help us make better decisions even if most people don't consciously use economic models to make decisions

A(n) _____ is a quantity that is fixed in value.

constant

An individual (or a firm or a society) should only take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs. This describes ______.

cost-benefit principle

In the graph of a line, a(n) _______ will lead the line to a parallel shift downward.

decrease in the vertical intercept

A(n) _____ variable is a variable in an equation whose value is determined by the value taken by another variable in the equation.

dependent

In the graph of a straight line, the vertical intercept is the value taken by the:

dependent variable when the independent variable is equal to zero.

Suppose that the extra cost to Ava of a third glass of soda is zero because she's at a restaurant that gives free refills. According to the Cost-Benefit Principle Ava should

drink a third glass of soda if the extra benefit of doing so is positive.

The study of how people make choices under conditions of scarcity and the results of those choices for society as a whole is called ______.

economics

You're trying to decide whether to go for a run. If you don't go for a run, you'll either watch TV or do your homework. Your opportunity cost of going on a run is

either the value you place on watching TV or the value you place on doing homework, whichever is larger

A mathematical expression that describes the relationship between two or more variables is a(n) ______.

equation

The Scarcity Principle captures the notion that although we have boundless needs and wants, the resources available to us are limited, so

having more of one good thing usually means having less of another.

The marginal benefit of carrying out an activity is the

increase in total benefit that results from carrying out one additional unit of the activity

The marginal cost of carrying out an activity is the

increase in total cost that results from carrying out one additional unit of the activity

A variable that determines the value of another variable in an equation is known as a(n) _____ variable.

independent

If undertaking an activity includes both explicit and implicit costs, then, according to the textbook, the opportunity cost of that activity ______.

is the sum of its explicit and implicit costs

The field of economics that would be most concerned with a recent fall in interest rates is

macroeconomics

The increase in total cost that results from carrying out one additional unit of an activity is its (one word) cost.

marginal

The increase in total benefit that results from carrying out one additional unit of the activity is called ______.

marginal benefit

Economists believe that people

never have enough time, money, or energy to do everything or have everything they want

You are considering whether to fill out a mail-in rebate form for an item you just purchased. The total cost of filling out and mailing in the form is $8, and the rebate is worth $20. Should your decision about whether to send in the rebate form depend on whether the price of the item you purchased was $20 or $2000?

no Although the rebate is 100 percent of the purchase price if the item was $20 and only 1 percent of the purchase price if the item was $2000, the benefit of mailing in the rebate is greater than the cost of mailing in the rebate ($20>$8), so you should mail in the rebate.

Suppose you've decided to go out to eat with some friends. If you take the time to go online, you know you can download a $5 dollar off coupon for the restaurant. Should your decision about whether to download the coupon depend upon the amount you expect to pay for your meal?

no The benefit of the coupon is $5, and the cost is the value of the time it would take you to download the coupon. Since neither of these depends upon the price of the meal, the price of the meal should not factor into your decision.

Suppose you plan to buy a new pair of running shoes. It's easier to buy them online, but the pair you want is $9 more expensive online than at the mall. According to the Cost-Benefit Principle, you should buy them

online if the convenience of buying them online is worth more than $9 to you

Suppose you need to buy a new cell phone charger. You can buy one at a nearby store for $10 or you can buy one online for $8.50, but it'll take 2 days to arrive. According to the Cost-Benefit Principle, you should buy the cell phone charger

online if the cost to you of waiting 2 days is less than $1.50 The benefit of buying the charger online is $1.50. The cost is that you'll have to wait two days. If this cost is less than $1.50, then you should buy the charger online.

Suppose you're trying to decide whether to look for free street parking or pay $10 to park in a parking garage. You should

park in the parking garage if you'd be willing to pay at least $10 to avoid the hassle of finding street parking

An implication of the Scarcity Principle is that

people must make trade-offs

The slope of a straight line is often calculated as the:

rise over run

When making a decision, sunk costs ______.

should be ignored

A cost that is beyond recovery at the moment a decision is made is a(n)

sunk cost

Economic _____ is the benefit of taking an action minus its cost.

surplus

Although we have boundless needs and wants, the resources available to us are limited, so having more of one good thing usually means having less of another. This is called ______.

the Scarcity Principle

The economic surplus of an action is

the benefit of taking an action minus its cost

The Cost-Benefit Principle states that an individual or society should take an action if, and only if

the extra benefits from taking the action are at least as great as the extra costs

The opportunity cost of an activity includes the value of

the next-best alternative that must be forgone.

The average benefit of carrying out an activity is ______.

the total benefit of undertaking n units of an activity divided by n

Jen spends her afternoon at the beach, paying $3 to rent a beach umbrella and $12 for food and drinks rather than spending 19 to go to a movie. Her opportunity cost of going to the beach is

the value she places on seeing the movie minus $4.

You are considering whether to spend the evening watching TV or studying for your economics course. Your opportunity cost of watching TV is

the value you place on studying for your economics course

A quantity that is free to take on different values is a(n)

variable