ECON 1040 Exam 1

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The marginal cost of flying a passenger is

This cannot be determined from the information given.

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

scarcity

Efficiency means that

society is getting the maximum benefits from its scarce resources

Melody decides to spend three hours working overtime rather than going to the park with her friends. She earns $20 per hour for overtime work. Her opportunity cost of working is

the enjoyment she would have received had she gone to the park

When computing the opportunity cost of attending a basketball game you should include

the price you pay for the ticket and the value of your time.

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

$500

Jamaica: 12 Coolers 6 Radios Norway: 24 Coolers 3 Radios Jamaica's opportunity cost of one cooler is

0.5 radios, and Norway's opportunity cost of one cooler is 0.125 radios.

Labor Hours Needed to Make 1 Unit of England: 1 Cheese, 4 Bread Spain: 4 Cheese, 8 Bread Number of Units Produced in 40 hours England: 40 Cheese, 10 Bread Spain: 10 Cheese, 5 Bread The opportunity cost of 1 unit of cheese for England is

1/4 unit of bread. **Note you want to look at the number of units produced, not the labor hours.

Suppose Jamaica decides to increase its production of radios by 12. What is the opportunity cost of this decision?

24 coolers

The opportunity cost of 1 unit of bread for England is

4 units of cheese

Consider Frank's decision to go to college. If he goes to college, he will spend $21,000 on tuition, $11,000 on room and board, and $1,800 on books. If he does not go to college, he will earn $16,000 working in a store and spend $7,200 on room and board. Frank's cost of going to college is? Whats the opportunity cost of him going to college?

A) $38,800 B)$42,600. (21,000+11,000+1,800=38,800) (16,000-7,200=8,800): (38,800+8,800=$42,600)

When the government redistributes income from the wealthy to the poor,

equality is improved, but efficiency is not.

Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that

people face trade-offs.

The "invisible hand" works to promote general well-being in the economy primarily through

people's pursuit of self-interest.

Jamaica has an absolute advantage in the production of

radios and Norway has an absolute advantage in the production of coolers.