Micro Chapter 1 Launchpad Questions

Suppose that a store sells candy bars for $0.89 for one and $1.50 for two. The marginal cost of the second candy bar is:

$0.61

Tim woke up this morning with a stomachache and decided to skip class in order to get more rest. What is the opportunity cost of Tim's decision to sleep in?

the value of attending the class he decided to miss

If you were not studying economics, you could be doing one of the following: sleeping in (which you value at $5), playing cards with your friends (which you value at $10), or working (you would have earned an extra $8). The opportunity cost of studying economics is therefore:

$10

rational behavior requires thinking at the margin. which example represents this type of thinking?

-deciding whether a second burger is worth the extra $2 -deciding whether the overtime pay is worth working on you day off -deciding whether to pay a fine for polluting the local harbor or installing antipollution machinery

Which statement does NOT involve thinking at the margin?

I worked eight hours today

Which question is NOT an example involving marginal analysis?

Should K-Mart rebrand all its stores to using the Sears name?

When economists assume people make rational decisions, it means that:

a rational person will respond to the benefits and costs associated with incentives

Marginal analysis would put an emphasis on:

additional costs and benefits

_____ people are forced to make tradeoffs

all

paying a salesperson more for increased sales is an example of:

an incentive

Suppose Mike has three hours of time to spend so he ranks the following activities in order of priority: (1) see a movie, (2) attend a ball game, (3) study economics. Assume that each activity takes three hours. What is Mike's opportunity cost of seeing the movie?

attending a ball game

The opportunity cost of undertaking an activity is defined as the:

benefit forgone by not undertaking the next-best activity

economics is a social science that involved the study of how individuals, firms, and societies:

choose among alternatives to satisfy their unlimited wants

_____ is how well resources are used and allocated.

efficiency

_____ is the fairness of various issues and policies

equity

Students who never miss class and study hard generally earn higher grades than those who do not. This is an example of:

incentives

Opportunity costs:

influence all economic decisions

the study of economics:

is about people making decisions regarding their use of scarce resources

resources are:

limited, but wants are unlimited

Employers give stock options to full-time employees who have been on the job more than three years. This is an example of:

people following incentives

when economists use the word "additional," they generally mean:

marginal

You will take the day off work if:

marginal costs are less than marginal benefits

_____ costs include the time and money that could have been spent on another highly valued activity.

opportunity

the highest valued alternative that is forgone when you choose an action is called its:

opportunity cost

which question would be considered a normative question?

should obstacle races be regulated to ensure the safety of its participants?

Hitting your snooze alarm before you get out of bed is an example of:

thinking at the margin

Scarcity is BEST defined as when:

unlimited wants exceed limited resources

because of scarcity:

we face tradeoffs in nearly every choice we make

thinking at the margin involves:

weighing the impact of one additional activity