Economics Final assignment 1

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

The marginal benefit of an activity is the

extra benefit associated with an extra unit of the activity.

The Cost-Benefit Principle indicates that an action should be taken if

It's extra benefit is greater or equal to its extra cost

A rational person:

makes choices based on added benefits and added costs

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending Elite U is:

$70,000

Suppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3rd game is

5

Forest lives in complete isolation in Montana. He is self-sufficient and feeds himself through hunting, fishing, and farming. Which of the following statements about forest is true?

Forest has to make trade offs

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, and engaging in one activity means giving up the other

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

Average cost

Economics is best defined as the study of:

Choice in the face of limited resources

The fact that most people make some decisions based on intuition rather than calculation is

Consistent with the cost-benefit model because most people intuitively weigh costs and benefits

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

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

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.

Economic surplus; $3000

The scarcity principle to

Everyone

Josh wants to go to the football game this weekend, but he has a paper due on Monday. It will take him the whole weekend to write the paper. Josh decides to stay home and work on the paper. According to the Scarcity Principle, the reason Josh doesn't go to the game is that:

Josh can't go to the game and finish the paper

Your scholarship depends on your maintaining a 3.5 cumulative GPA. Your GPA for last semester was 3.6, which brought your cumulative GPA down. What must be true?

Last semesters grades were lower than your overall GPA

One thing that distinguishes normative economic principles from positive economic principles is that

Normative principles tell us how people should behave, and positive principles tell us how people will behave

All the worlds resources were to magically increase one hundredfold, then

People would still have to make trade-offs

If one fails to account for implicit costs in decision making, then applying the cost-benefit rule will be flawed because:

The costs will be understated

Janie must choose to either mow the lawn or wash clothes. If she mows the lawn, she will earn $30, and if she washes clothes, she will earn $45. She dislikes both tasks equally and they both take the same amount of time. Janie will therefore choose to ______ because it generates a ______ economic surplus.

Wash clothes; bigger

The scarcity principle states that

With limited resources having more of one thing means having less of another

You want to buy a TV that regularly costs $250. You can either by the TV from a nearby store or from a store that's downtown. Relative to going to the nearby store, driving downtown involves additional time and gas. The downtown store, however, has a 10% off sale this week. Last week you drove downtown to save $20 on some concert tickets, a 15% savings. Should you drive downtown to buy the TV?

Yes, because you will save more than $20