Fundamentals Problem Set

The table below describes the total and marginal benefit Elvis gets from eating fried peanut butter and banana sandwiches. Elvis' Benefits of Fried Peanut Butter and Banana Sandwiches Fried PBB SandwichesTotal Benefit (dollars)Marginal Benefit (dollars)1424226624375 481 578-3 What is the marginal benefit of the 4th fried peanut butter and banana sandwich? $6 $15 $81 $9

A: $6

Mountain Mack spends his time carving fishing lures and duck decoys. If Mountain Mack spends all of his time carving fishing lures he can carve 40 lures in a week. If he spends all of his time carving duck decoys he can carve 50 decoys in a week. For every 10 duck decoys Mountain Mack carves he must give up 8 fishing lures. Fill in the values in the table

A: Fishing lures= 40,32,24,16,8,0 Duck Decoys= 0,10,20,30,40,50

Samantha needs to purchase something that economists would label as "labor" to help her produce court documents for her law firm. Which of the following is an example of labor? 1.The ability to see that organizing courtroom documents is an unfilled market need 2.Filing cabinets to store the typed courtroom documents 3.A stenography machine to type courtroom proceedings 4.A stenographer who can type courtroom proceedings

A: a stenographer who can type courtroom proceedings

a. What is Venice's opportunity cost of producing one pound of pasta? 0.4 bottle of wine 0.5 bottle of wine 2 bottles of wine 2.5 bottles of wine b. What is Venice's opportunity cost of producing one bottle of wine? pound(s) of pasta c. What is Florence's opportunity cost of producing one pound of pasta? 2.5 bottles of wine 0.4 bottle of wine 0.5 bottle of wine 2 bottles of wine d. What is Florence's opportunity cost of producing one bottle of wine? pound(s) of pasta e. { } the comparative advantage in producing pasta and { } the comparative advantage in producing wine.

A: a= 0.5 bottles of wine b= 2 lbs of pasta c=0.4 bottle of wine d= 2.5 lbs of pasta e= Florence, Venice

a. Which producer has the comparative advantage in producing puzzles? b. Which producer has the comparative advantage in producing puppets? c. If both producers decided to trade with each other to stock their toy stores, which of the following is a range of terms of trade that would benefit both Geppetto and Lewis (1 puppet = x puzzles)? They would be willing to trade in the range of 1 puzzle per puppet to 6 puzzles per puppet. They would be willing to trade in the range of 1 puzzle per puppet to 5 puzzles per puppet. They would be willing to trade in the range of 2 puzzles per puppet to 5 puzzles per puppet. They would be willing to trade in the range of 2 puzzles per puppet to 6 puzzles per puppet.

A: a= Gepetto, b= Lewis, c= they would be willing to trade in the range of 2 puzzles per puppet to 5 puzzles per puppet

a. Geppetto and Lewis agree to trade at a rate of 3 puzzles for each puppet. With those terms of trade, who is most likely to be the supplier of puzzles? Who is most likely to be the supplier of puppets? Puzzles: Puppets: b. The two toy store owners agree to specialize and to trade 30 puzzles for 10 puppets. The terms of trade are still 3 puzzles for each puppet. How many puzzles and puppets will each one have after they complete their trade? Geppetto: Lewis:

A: a= Puzzles- Gepetto, Puppets-Lewis b=Gepetto 70 puzzles and 10 puppets Lewis 30 puzzles and 15 puppets

a. In the circular flow model, households purchase goods and services from firms in the { } which generates { } for the firms. b. In the circular flow model, firms purchase { } from households in exchange for { }

A: a= product market, revenue b= resources, income

a. In the circular flow model, households provide inputs to firms through the { } and in exchange receive { } from firms. b. In the circular flow model, firms receive { } from households when households purchase goods and services in the { }

A: a= resource market, income b= expenditures, product market

a. If Mountain Mack splits his week evenly between carving fishing lures and duck decoys, what is the maximum number of fishing lures and duck decoys could he carve? 40 fishing lures and 50 duck decoys 8 fishing lures and 10 duck decoys 24 fishing lures and 20 duck decoys 20 fishing lures and 25 duck decoys b. If Big Lake Bob splits his week evenly between carving fishing lures and duck decoys, what is the maximum number of fishing lures and duck decoys could he carve? 50 fishing lures and 15 duck decoys 60 fishing lures and 12 duck decoys 100 fishing lures and 30 duck decoys 20 fishing lures and 6 duck decoys c. Combined, how many fishing lures and duck decoys could Mountain Mack and Big Lake Bob carve if each one split his week between the two products? 28 fishing lures and 16 duck decoys 140 fishing lures and 80 duck decoys 70 fishing lures and 40 duck decoys 84 fishing lures and 32 duck decoys d. Who has the comparative advantage in carving fishing lures? In carving duck decoys? Fishing lures: Duck decoys: e. If both Mountain Mack and Big Lake Bob choose to specialize in the product in which he has a comparative advantage, how many of each product could they produce together? 100 fishing lures and 50 duck decoys 84 fishing lures and 32 duck decoys 40 fishing lures and 30 duck decoys 140 fishing lures and 80 duck decoys

A: a=20 fishing lures and 25 duck decoys b= 50 fishing lures and 15 duck decoys c= 70 fishing lures and 40 duck decoys d=Fishing Lures: BIG LAKE BOB, Duck Decoys: MOUNTAIN MACK e= 100 fishing lures nad 50 duck decoys

Lucinda collects Kewpie dolls, and can afford to buy up to six dolls. The table below describes the marginal benefit Lucinda gets for each additional doll she adds to her collection. Lucinda's Marginal Benefit of Kewpie Dolls Kewpie Dolls Marginal Benefit (dollars)1$15.00212.0039.0046.0053.0060.00 a. If the price of Kewpie dolls is $6.00 per doll, how many dolls would Lucinda buy if she is rational? 2 dolls 4 dolls 3 dolls 1 doll b. If the price of Kewpie dolls rose to $9.00 per doll, how many dolls would Lucinda buy if she is rational? 1 doll 2 dolls 4 dolls 3 dolls

A: a=4 dolls; b=3 dolls

a. If the two countries decided to combine their resources, what is the maximum amount of potatoes the two countries could produce? 1,000 tons 250 tons 750 tons 500 tons b. If the two countries decided to combine their resources, what is the maximum amount of sausages the two countries could produce? 350 tons 150 tons 750 tons 250 tons c. If the two countries specialize and produce the good in which they have a comparative advantage, what is the maximum combination of potatoes and sausages they can produce together? 250 tons of potatoes and 150 tons of sausages 650 tons of potatoes and 450 tons of sausages 500 tons of potatoes and 200 tons of sausages 750 tons of potatoes and 350 tons of sausages

A: a=750 tons b=350 tons c=500 tons of potatoes and 200 tons of sausage

a. A firm decides to buy an existing factory in town. This would occur in the { }. b. Profits (income generated from entrepreneurial ability) are earned by { }. c. The price of a cup of coffee is determined in the { }

A: a=resource market b=households c= product market

Which of the following can best be characterized as a subject of microeconomics? 1.An examination of an economy's price level 2.An examination of a country's economic growth 3.An examination of consumer behavior 4.An examination of monetary policy

A: an examination of consumer behavior

Which of the following can best be characterized as a subject of microeconomics? 1. An examination of inflation 2.An examination of a country's imports and exports 3.An examination of an economy's overall level of production 4.An examination of how much of a particular good gets produced

A: an examination of how much of a particular good gets produced

Which of the following can best be characterized as a subject of macroeconomics? 1.An examination of inflation 2.An examination of where goods come from 3.An examination of how much of a particular good gets produced 4.An examination of consumer behavior

A: an examination of inflation

Which of the following can best be characterized as a subject of macroeconomics? 1.An examination of the production of a good 2.An examination of how a change in demand or supply impacts the price of a good 3.An examination of monetary policy 4.An examination of specialization

A: an examination of monetary policy

b. Which of the following combinations of fishing lures and duck decoys is unobtainable to Mountain Mack in one week's worth of carving? 16 fishing lures and 30 duck decoys 20 fishing lures and 10 duck decoys 10 fishing lures and 40 duck decoys 40 fishing lures and 0 duck decoys c. Which of the following combinations of fishing lures and duck decoys is an efficient combination? 10 fishing lures and 40 duck decoys 20 fishing lures and 10 duck decoys 50 fishing lures and 0 duck decoys 16 fishing lures and 30 duck decoys

A: b=10 fishing lures and 40 duck decoys c=16 fishing lures and 30 duck decoys

Which of the following scenarios most accurately reflects the concept of scarcity? 1.Brett is a farmer with an open field on which he can plant either soybeans or corn. 2.Sienna enjoys viewing flowers in the city garden during her walk. 3.The Smith Household produces an average of three bags of trash a week. 4.The steak Henry did not buy because he is a vegetarian

A: brett is a farmer with an open field on which he can plant either soybeans or corn

The tools and machines used to produce a good or service are what type of market resource? 1.Entrepreneurial ability 2.Labor 3.Capital 4.Land

A: capital

Maurice needs to purchase something that economists would label as "land" to help him produce cloth to sell to the fashion industry. Which of the following is an example of land? 1.A factory in which to produce fabric 2. Cotton to be woven into fabric 3.The ability to organize a factory to meet the demand for fabric 4.New workers trained to run an industrial loom

A: cotton to be woven into fabric

The ability to see a market need and to organize inputs to meet that need is what type of market resource? 1.Capital 2.Labor 3.Entrepreneurial ability 4.Land

A: entrepreneurial ability

The fish in the ocean are what type of market resource? 1.Capital 2.Labor 3.Land 4.Entrepreneurial ability

A: land

Which of the following transactions would take place in the resource market? 1.Jerry goes to a sporting goods store and purchases a dozen golf balls before meeting some friends at the golf course. 2.Lyndsay worked 40 hours this week as a cashier at the local hardware store. 3.George visits his favorite barber shop and gets a new haircut. 4.Sally gets an airline ticket from an online travel website for her trip to the beach.

A: lyndsay worked 40 hours this week as a cashier at the local hardware store

{ } examines economies on a large scale, while { } examines economic activity on a relatively small scale

A: macroeconomics, microeconomics

Bob, the owner of a local deli in town, needs to purchase something that economists would label as "capital" to help him produce sandwiches. Which of the following is an example of capital? 1.An additional worker 2.Ham for the sandwiches 3.new idea that automates the making of sandwiches 4.meat slicer to cut ham for sandwiches

A: meat slicer to cut ham for sandwiches

Which of the following transactions would take place in the resource market? 1.Raj donates canned food to his local food bank. 2.Susan opens a new bakery in town. 3.Anne decides to purchase a used car. 4.Jim attends the college basketball game

A: susan opens a new bakery in town

The opportunity cost of an action is always equal to: 1.the things you could have done instead of the action you chose to undertake. 2.the money you give up to undertake the action. 3.the next-best alternative for the resources used to undertake the action. 4.the time you give up to undertake the action

A: the next-best alternative for the resources used to undertake the action