Econ 212 Chapter Review Question

Making choices based on comparing marginal benefits with marginal costs

Marginal Analysis

For each of the following situations involving marginal cost (MC) and marginal benefit(MB) indicate whether it would be best to produce more , fewer, or the current number of units. a. 3,000 units at which MC =$10 and MB =$13

More

For each of the following situations involving marginal cost (MC) and marginal benefit(MB) indicate whether it would be best to produce more , fewer, or the current number of units. d. 82 units at which MC<MB

More

The next best thing that must be forgone in order to produce one more unit of a given product

Opportunity Cost

Micro or Macro A U.S software firm discharged 15 workers last month and transferred the work to India

Micro

Micro or Macro An unexpected freeze in central Florida reduced the citrus crop and caused the price of oranges to rise

Micro

Micro or Macro Last week Wells Fargo Bank lowered its interest rate on business loans by one-half of 1 percentage point

Micro

Suppose that you are given a $100 budget at work that can be spent only on two items: staplers and pens. If staplers cost $10 each and pens cost $2.50 each then the opportunity cost of purchasing one stapler is:

4 pens

Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30, how many pounds of potatoes will she purchase? What if she only had $2 to spend?

Janice will purchase 3 with her original $5.00 of income. Janice will purchase 2 when her income is $2.00.

Explain how each of the following events affects the location of a country's production possibilities curve d.A devastating earthquake destroys numerous production facilities.

The curve should shift inward with the destruction of resources aka captial

Explain how each of the following events affects the location of a country's production possibilities curve c. A new technique improves the efficiency of extracting copper from ore.

The curve should shift outward as more production is possible with existing resources

The pleasure, happiness, or satisfaction obtained from consuming a good or service

Utilty

Micro or Macro The consumer price index rose by 3.8 percent from August 2011 to August 2012

Macro

Micro or Macro The unemployment rate in the United States was 8.1 percent in August 2012

Macro

Pham can work as many or as few hours as she wants at the college bookstore for $9 per hour. But due to her hectic schedule, she has just 15 hours per week that she can spend working at either the bookstore or at other potential jobs. One potential job, at a café, will pay her $12 per hour for up to 6 hours per week. She has another job offer at a garage that will pay her $10 an hour for up to 5 hours per week. And she has a potential job at a daycare center that will pay her $8.50 per hour for as many hours as she can work. If her goal is to maximize the amount of money she can make each week, how many hours will she work at the bookstore?

4 hours

For each of the following situations involving marginal cost (MC) and marginal benefit(MB) indicate whether it would be best to produce more , fewer, or the current number of units. e. 5 units at which MB<MC

Fewer

For each of the following situations involving marginal cost (MC) and marginal benefit(MB) indicate whether it would be best to produce more , fewer, or the current number of units. c.43,277 units at which MC = $99 and MB=$99

Current

Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. For each of the following situations would the attainable set of combinations that you could afford increase or decrease? b.Your budget remains $100, the price of books remains $25 but the price of movie tickets raise to $20

Decrease

The social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity

Economics

For each of the following situations involving marginal cost (MC) and marginal benefit(MB) indicate whether it would be best to produce more , fewer, or the current number of units. b. 11 units at which MC= $4 and MB=$3

Fewer

Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. For each of the following situations would the attainable set of combinations that you could afford increase or decrease? a. Your budget increases from $100 to $150 while the prices stay the same

Increase

Suppose that you initially have $100 to spend on books or movie tickets. The books start off costing $25 each and the movie tickets start off costing $10 each. For each of the following situations would the attainable set of combinations that you could afford increase or decrease? c. Your budget remains $100 the price of movie tickets remains $10 but the price of books falls to $15

Increase

What are the two major ways in which an economy can grow and pus out its production possibilities curve?

Increase in resource supplies and advances in technology

Micro or Macro U.S. output, adjusted for inflation, decreased by 2.4 percent in 2009

Macro

Explain how each of the following events affects the location of a country's production possibilities curve a. the quality of education increases

Productivity would rise and this would shift the curve outward

Explain how each of the following events affects the location of a country's production possibilities curve b.The number of unemployed workers increase

Should not affect location of the curve.