Macroeconomics first quiz
You have been invited to play a 4-hour round of golf that has a value to you of $50. The total price to play the round of golf is $35. The net benefit of the round of golf is
$15
Suppose that you allocate $20 each week for your entertainment budget. This money is spent on two items: either renting movies for $1 each at Redbox or downloading songs from iTunes at $1 each. Given this information, which of the following would represent your budget constraint for entertainment?
Amount spent on iTunes + Amount spent at Redbox = $20.
Which of the following would not be considered one of the possible opportunity costs of a recent high school graduate starting their career right away by getting a full minus time jobstarting their career right away by getting a full−time job. A. Spending a year backpacking across EuropeSpending a year backpacking across Europe. B. Going to Haiti to do missionary work.Going to Haiti to do missionary work.. C. Starting college right awayStarting college right away. D. None of these would be considered an opportunity cost. E. All of these is a possible opportunity cost.
E.
What is the difference between marginal values and average values?
Marginal values show the additional benefit or cost from consuming an additional unit of a good, while average values are the benefit or cost per unit of a good.
Given this information, for which of these activities would you be able to compare opportunity costs? 1. The opportunity cost of the first activity is missing 3 hours of work. 2. The opportunity cost of the second activity is missing a concert that you have tickets to. 3. The opportunity cost of the third activity is missing the afternoon nap that you take every day.
You can compare all the activities after you translate all the missed activities into dollar amounts.
The concept of opportunity cost would explain whether someone chooses to drive, take a cab, take a bus, or walk to school or work because someone with ___________.
a high wage is more likely to drive or take a cab to work because his time is worth more.
Assume every semester after finals you fly back to your hometown using a $300 ticket you buy online. You have 40,000 frequent flier miles. You could exchange your miles for a round-trip ticket to Bermuda over spring break. If you choose to exchange your airline miles for a free trip to Bermuda over spring break, then your trip
cost $300, since your next-best alternative for your miles was to use them to fly home at the end of the semester.
The Bureau of Labor Statistics defines the labor-force participation rate as the number of people in the labor force (those that either have jobs or are actively looking for jobs) as a percentage of the working-age population. The Organization for Economic Cooperation and Development defines the total fertility rate in a specific year as the total number of children that would be born to each woman if she were to live to the end of her child-bearing years. Given the two definitions above, let's look at the relationship between the labor-force participation rate and the total fertility rate for highly educated women with high earning potential. You would expect that the labor-force participation rate among highly educated women would be ______, since the opportunity cost of not working for highly educated women is ____ that of all women. You would expect that the total fertility rate among highly educated women would be _____ educated women, since the opportunity cost of staying home to raise children is _____ for highly educated women.
higher than average higher than lower than less higher
The fact that Jerry, Elaine, and George had tickets for a movie after dinner ____ the amount that they were willing to pay as a bribe.
increases
If they decide to pay an amount that is higher than the value of the meal that they would have had, then we know that they ____
may be acting rationally, depending on how greatly they value catching the movie after their meal. If they put a high value on the movie, then a large bribe is rational.
Now assume that you have a job that pays you $8 per hour. Would you be optimizing to accept the invitation to play golf? To optimize, you should _____ golf.
not play
The concept of opportunity cost is a measure of ____
the value of the best alternative use of a resource
Your budget constraint for entertainment illustrates the concept of _____, since as you increase your purchases of one item, _______.
trade-off you must decrease your purchases of the other item
The opportunity cost of an activity is a measure of _____ when you do that activity.
what is given up
Consider the total cost of traveling from point A to point B. The cost of traveling by car would include the cost of gasoline and the opportunity cost of time; the cost of hopping on a bus would include the bus ticket and the opportunity cost of time. Assume that the bus ticket costs less than the gasoline. Does this imply that using a bus to get to the destination involves lower total costs than getting there by car? What if the bus doesn't take the fastest route from point A to point B?
The marginal cost of using a bus may be higher if it takes more time than by car.
In an episode of the sitcom Seinfeld, Jerry and his friends Elaine and George are waiting to be seated at a Chinese restaurant. Tired of waiting, Elaine convinces the others that they should bribe the maître d' to get a table. What is the key factor that they should consider when deciding how much they are willing to pay the maître d'?
The opportunity cost of their time while waiting.
Let's say that you are trying to decide what to do on Friday at 11 a.m. You rank your possible options from the one you value the most to the one that you value the least in the following order: going to class, sleeping in late, going to work early, getting lunch, going to the gym to exercise, and watching television. If you decide to go to class, then what do we know about the opportunity cost of your decision?
The opportunity cost would be sleeping in late, since it was your next-best option.
