QUIZ 1 ECO 231

Suppose you buy a plane ticket that is non-refundable. But at the last minute you cannot take the trip. But you can sell the ticket. You paid 700 dollars for the ticket. The cost of sending the ticket to someone through overnight mail is 20 dollars and you spend 10 on a courier to get the ticket to the post office for overnight delivery. What is the minimum you should accept for the ticket?

30 because the 700 is a sunk cost

Refer to Exhibit 1-1. The student whose study habits are illustrated here will maximize the net benefits of studying when she has studied (https://quizlet.com/44437810/econ1-1-flash-cards/) <-- diagram

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Refer to Exhibit 1-1. If the student whose study habits are illustrated here is currently studying for 2 hours she should (https://quizlet.com/44437810/econ1-1-flash-cards/) <-- diagram

increase the number of hours she is studying because the marginal benefit of studying for 2 hours is greater than the marginal cost of doing so.

The ceteris paribus assumption is used in economics to

make things simple and to allow us to come up with acceptable predictions

Economic ___ are simplified representations of the real world that we use to help us understand real world events

models

When you weigh the pros and cons of making a decision, an economist would describe you are being

rational

In economics the concept that we are motivated by self-interest and we can gain something by peforming a deed is called

rational self-interest

Things of value that are used to produce other things that satisfy peoples wants are called

resources

A cost that becomes irrelevant and does not apply to future decisions is referred to as a(n)

sunk cost

As in weather forecasting and economics, a model is judged to be useful by

the ability to predict what is going to happen in the future

Economics is best defined as the

the study of how people make choices to satisfy their wants

If you are considered to be rational, this means that according to an economist, you

you consider the additional costs and additional benefits before making a decision

Self-interest in economics means

you do what makes you the happiest