ECON Chapter 1 Homework
If you earn $12 an hour at your job and $20 per week with a 40 hour work week, your weekly earnings will be $_____.
$500 20 + (12*40) = 500
explicit cost
a cost that involves spending money
A sunk cost is _____.
a cost that is beyond recovery at the moment a decision must be made
sunk cost
a cost that is beyond recovery at the moment a decision must be made ex: nonrefundable airline ticket
implicit cost
a non-monetary opportunity cost
Any combination of goods for which currently available resources do not allow an increase in the production of one good without a reduction in the production of another good is known as a(n) _____.
efficient point
When making decisions, people sometimes make mistakes because they _____.
fail to consider implicit costs
pitfall
failing to consider implicit costs
The _____ Principle states that a person, firm, or society is more likely to take action if its benefit rises and less likely to take action if its cost rises.
incentive
The marginal benefit of carrying out an activity is the _____.
increase in total benefit that results from carrying out an additional unit of activity
marginal benefit
increase in total benefit that results from carrying out one additional unit of an activity
An _____ variable determines the value of another variable in an equation.
independent
The increase in total cost that results from carrying out one additional unit of an activity is its _____ cost.
marginal
One common decision pitfall is to _____.
measure costs and benefits as proportions rather than absolute dollar amounts
A _____ economic principle is one that says how people should behave.
normative
outsourcing
obtain (goods or a service) from an outside or foreign supplier, especially in place of an internal source
Economic growth is represented by an _____ shift in a country's production possibilities curve.
outward
Macroeconomics is the study of _____.
the performance of national economies and the policies that governments use to improve that performance
An activity's _____ benefit is the total benefit of carrying out n unit of an activity divided by n.
average
economic surplus
benefit of taking action minus its cost
economic models
can help us make better decisions even if most people don't consciously use these to make decisions
All of the factors that are likely to affect a country's comparative advantage are _____.
culture natural resources climate institutions
The value of an _____ variable is determined by the value taken by another variable in the equation.
dependent
The benefit of taking an action minus its cost is known as _____.
economic surplus
marginal cost
increase in total cost that results from carrying out one additional unit of an activity (P2-P1) / (Q2-Q1)
economics
the study of how people make decisions under conditions of scarcity and the results of those choices for society
average benefit
the total benefit of undertaking n units of an activity divided by n
average cost
the total cost of undertaking n units of an activity divided by n
opportunity cost
the value of what must be forgone to undertake an activity and the next best thing - includes implicit and explicit costs
scarcity
there is never enough time, money, or energy to do everything we want to do or have everything we'd like to have
In the graph of a straight line, the value taken by the dependent variable when the independent variable is equal to zero is known as the _____.
vertical intercept
scarcity principle
we have boundless needs and wants, but the resources available to us are limited. having more of one good thing usually means having less of another = trade-off
rational
word meaning well-defined goals and trying to fulfill them the best you can
Example 1.1: Comparing Costs and Benefits The Cost-Benefit Principle tells us that you should go a farther distance to get a good if the benefit of doing so exceeds the cost.
Reason: The benefit of taking any action is the dollar value of everything you gain by taking it. The benefit of buying downtown is exactly $10 because that's the amount you're willing to buy the good. The cost of taking any action is the dollar value of everything you're willing to give up by taking it. The cost of buying downtown is the dollar amount to the time and trouble it takes to make the trip.
Example 2.2 Comparing Costs and Benefits Should you walk Downton to save $10 on a $2,020 laptop? You're about t to buy a $2,020 laptop at the campus store when friend tells you that you can buy the same one for $2,010 downtown. If the downtown store is 30 mins away, where should you buy the computer?
The benefit of the trip downtown is not the proportion you save on the original price. Rather, it is the absolute dollar amount you save. The benefit of walking downtown to buy the laptop is $10, exactly the same as for a computer game. And because the cost of the trip must also be the same for both cases, the economic surplus of making both trips must be exactly the same. That means that a rational decision maker would make the same decision in both cases.
If it takes a person less time to perform a task than anyone else, then that person has an _____ advantage in performing that task.
absolute
cost-benefit principle
an individual, firm, or society should take action only if the extra benefits from taking action are at least as great as the extra costs
Economists view scarcity as _____.
an unavoidable fact of life
Any combination of goods that can be produced using currently available resources is known as a(n) _____.
attainable point
Microeconomics is the study of _____.
individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets
The increase in total cost that results from carrying out an additional activity is the _____ cost.
marginal
Suppose you need to buy a cell phone charger. In store, it's $10, but online it's $8.50. According to the Cost-Benefit Principle, you should by the charger _____.
online if the cost to you of waiting 2 days is less than $1.50
An implication of the Scarcity Principle is that _____.
people must make trade-offs
A _____ economic principle is one that predicts how people be behave.
positive
A graph that decribes the maximum amount of one good that could be produced for every possible level of production of the other good is a _____.
production possibilities curve
constant
quantity fixed in value
When deciding whether to take action, sunk costs _____.
should be ignored
