Micro Final

A grocery store is running a "buy-one-get-another-at-one-half-off" promotion on a dozen doughnuts. So the first dozen is $6, and the second would be $3. A person would buy the second dozen if their marginal benefit from the second dozen doughnuts is:

greater than $3.

Absolute advantage refers to:

the ability to make a good with fewer inputs than another producer.

Comparative advantage refers to:

the ability to produce a good with a lower opportunity cost than another producer.

When deciding whether or not to undertake an activity, economists compare:

the additional cost of the activity against the additional benefits received.

Suppose you have ordered a value meal at a local fast-food restaurant. The cashier asks if you would like to "supersize" your meal. In order to make an efficient decision, you should compare:

the additional cost of the larger meal versus the additional benefits received.

A customer at a fast-food restaurant may choose to order a burger for $4.00 and fries for $1.50 or order a value meal (that includes the burger, fries, and a drink) for $6.00. What is the marginal cost of the drink if the customer orders the value meal?

$0.50

Dinah quits her administrative job, which pays $50,000 a year, to finish her 4-year college degree. She spends $2,500 on food per year when she was on the job. Her annual college expenses are $11,000 for tuition; $1,900 for books; and $2,500 for food. The opportunity cost of attending college for the year is:

$62,900

Air travel from Chicago to Los Angeles costs $800 and takes 4 hours. A bus ticket between the cities costs $100 and takes 104 hours. Other things being constant, the minimum value of one's time that would induce a rational individual to fly rather than drive would be:

$7 per hour

Table: iPhone and Apple Watch Production 1 iPhone 1 : Apple Watch Chinese labor units3:3 German labor units5:4 According to the table on iPhone and Apple Watch production, the opportunity cost of producing one iPhone is:

5/4 Apple Watches for Germany, and 1 Apple Watch for China.

Table: iPhone and Apple Watch Production 1 iPhone 1 : Apple Watch Chinese labor units3:3 German labor units5:4 According to the table on iPhone and Apple Watch production, which of the following is TRUE about German and Chinese comparative advantages?

China has a comparative advantage in producing iPhones, and Germany has a comparative advantage in producing Apple Watches.

Table: iPhone and Apple Watch Production 1 iPhone 1 : Apple Watch Chinese labor units3:3 German labor units5:4 According to the table on iPhone and Apple Watch production, which of the following is TRUE?

China has an absolute advantage in producing both iPhones and Apple Watches.

What should happen to crime rates when the unemployment rate rises?

Crime rates should rise because the opportunity cost of crime (i.e., getting a legitimate job) has fallen.

David sells his car, which he considers worthless, to Cameron for $200. Which of the following statements is TRUE? -This trade did not create value because Cameron is buying a car that David considers worthless. -Cameron is the only one made better off by the trade. -David and Cameron must have different valuations for the car. -David is made better off by the trade, but Cameron is made worse off.

David and Cameron must have different valuations for the car.

Which statement is TRUE? -A country could have a comparative advantage in producing everything. -It is impossible for a country to have a comparative advantage in producing all goods and services. -The benefits of trade depend on absolute advantage, not comparative advantage. -A country that has the absolute advantage in production will also have the comparative advantage.

It is impossible for a country to have a comparative advantage in producing all goods and services.

Joe runs a landscape business. He knows that providing landscaping services costs him $100 per hour on average, while the cost of providing such services is $150 per hour after 5 pm (due to overtime pay, reduced productivity, and the added wear and tear on his equipment). A potential client offers Joe $130 per hour to provide services but needs him to provide the services after 5 pm due to circumstances at the property.

Joe should decline the job, since he would lose $20 per hour worked.

Some people take jobs that are dangerous, but such jobs pay well. For example, oil rig workers make $78,000 per year on average. Why?

Oil rig workers are accepting of the danger in trade for higher salaries.

Most people do not buy the safest car they can find. Why not?

Other factors matter besides safety, such as comfort, cost, and fuel economy.

Suppose South Africa can produce 6 phones or 3 computers with 1 unit of labor, and Australia can produce 7 phones or 2 computers with 1 unit of labor. If South Africa can trade only with Australia, then the theory of comparative advantage suggests that:

South Africa should specialize in producing computers and import phones from Australia.

Why is it less costly to attend graduate school during a recession?

The opportunity cost is lower during a recession because there are fewer labor market opportunities.

Suppose a famous baseball player, Jacob deGrom, hires a high-school student to paint his house. Which of the following is most likely TRUE?

The opportunity cost of painting a house is higher for Jacob deGrom than for the high-school student.

The opportunity cost of winning a free ticket to the World Series worth $885 in the resale market and choosing to attend the game is:

at least $885, the lost market value of selling the ticket, and the time to go.

All of the following are decisions made on the margin EXCEPT: -eating dessert at a restaurant. -buying new shoes to go with your new clothes. -reading for one more hour before going to sleep. -budgeting $10,000 to buy a new car.

budgeting $10,000 to buy a new car.

During a recession, we expect that the opportunity cost of attending college:

falls

As trade becomes more widespread, specialization _____, which in turn _____ productivity.

increases; increases

When the opportunity cost of a choice decreases:

individuals are more likely to choose that same option.

The opportunity cost of committing a crime and spending 5 years in jail:

is higher for people who are employed than for the unemployed.

Scarcity

is when there isn't enough to satisfy all our wants. we want more than what we have.

In the 2 hours between classes a student can do one of three things, ranking them from most to least desirable as: (1) chat with friends, (2) study economics, or (3) eat lunch. This student's opportunity cost of chatting with friends is:

the value of studying economics.

The opportunity cost of a choice is:

the value of the opportunities lost. the value of the highest-valued alternative one must give up in order to get something.

Mark Zuckerberg dropped out of college and founded Facebook. His opportunity cost of attending college was:

tuition, the cost of books, and the income from his Facebook pursuits.