Econ 102

if an employer offers a potential employee $45,000, but the employee would be willing to work for 40,000 and the employer will make $65,000 from the work that the employee does, what is the employee's economic surplus?

$5,000

Deniz produces cups and bowls. Her production possibility frontier for a particular amount of time is displayed below. What is the opportunity cost of producing an additional cup?

2 bowls

You have to try to persuade your parents to go to your graduation because your brother's talent show is scheduled for the same time. This BEST exemplifies which of these interdependencies ?

Dependencies between people or business

Which of these best explains why there is no decision that does not have associated costs?

Every choice you make causes you to give up doing something else.

Businesses _____ to learn their marginal costs and benefits

Experiment at the margin

You are the CEO of a car manufacturing company, and realize that you may have to lay off 10,000 employees unless you take some other form of action. Your Chief Financial Officer comes up with two solutions: the first saves 6, 000jobs , and the second causes the company to lose 4,000 jobs. The first option sounds ideal at first; however, both options give the same outcome of cutting 4,000 jobs and saving 6,000 jobs. This example represents the concept of :

Framing effect

Manzo produces shirts and jeans. His production possibility frontier for a particular amount of time is displayed below. What is the opportunity cost of producing an additional shirt?

Half a pair of jeans

Ayalon owns a fast food restaurant that is open 18 hours a day. He is considering the idea of having his restaurant remain open 24 hours a day, but he realizes that the success of this plan may be affected by the changing hours of his competitorsAyalon is taking into account the principle.

Interdependence

Changes in prices and opportunities in one market affect the choices a person might make in another market. This is pointed out in the ________ principle

Interdependence

Angela owns a software company with 10 employees. Because she is not sure whether an employee would improve her economic surplus, she hires another employee and notices that her total costs have increased by $1,250 and her total revenue has increased by $1,000, Which of these would be the best course of action for Angela ?

Let the 11th employee goor do not replace the next employee who quits.

When someone asks whether they could improve their circumstance with a little more or less of something, they are taking into account the _________ principle.

Marginal

Which two values should a business owner compare before deciding to hire one more worker?

Marginal cost and marginal benefit

Evie, a receptionist at a car dealership, asks herself the question"Should go back to school, or should I continue to work at the dealership?" The fact that she is comparing the idea of going to school with her next best option indicates that she is applying the ______ principle

Opportunity cost

The ______ helps people make better decisions by forcing them to focus on the real trade-offs they face

Opportunity cost principle

______ refer(s) to the problem that resources are limited

Scarcity

Which one of these questions CANNOT be simplified by applying the marginal principle?

Should I take another class at school this semester?

You have decided that you will buy pizza, but you are still trying to decide how many pieces of pizza you should buy. Which economic principle are you taking into account?

The marginal principle

Which of these principles, when followed correctly, causes people to avoid making choices that reduce their economic surplus ?

The cost-benefit principal

Which principle is sometimes best remembered by the conclusion that incentives matter?

The cost-benefit principal

You are considering starting a sandwich shop, but are comparing that to the idea of staying at your current job instead. Which economic principle are you taking into account?

The opportunity cost principle

Which best explains why entrepreneurs often have a difficult time shutting down their business even if the economic profit from their business is negative ?

They find it difficult to ignore sunk costs

Which of these best describes the big idea behind the interdependence principle?

What else?

When are out-of-pocket costs also opportunity costs

When the out-of-pocket costs do not exist in the next best alternative.

Your willingness to pay for a pair of jeans is $50. According to the cost benefit principle, when should you avoid buying a pair of and instead opt to keep your money?

When the price of the jeans exceeds $50

In order to convert nonfinancial costs or benefits into their monetary equivalentassess your

Willingness to pay

Sunk costs are:

costs that have been incurred and cannot be reversed