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Exam 1: Thinking Like an Economist

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Question 21

Multiple Choice

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Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. Assume the minimum that Matt would be willing to accept to drive to campus is equal to the $4 he saved on the concert ticket. What would his economic surplus be if he bought his textbooks at the university bookstore rather than online?

A) $5
B) $1
C) $50
D) $20

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Question 22

Multiple Choice

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According to the Incentive Principle:

A) it is irrational to perform volunteer services.
B) people will always take the highest-paying job they are offered.
C) benefits are more important than costs in making a decision.
D) people tend to do more of something when its benefits are greater.

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Question 23

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The study of individual choice and its implications for the behavior of prices and quantities in individual markets is:

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfare is $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfare is $450. What is the opportunity cost of using the coupon for the Miami trip?

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ________ would be ________.

The opportunity cost of an activity includes the value of:

A study of the impact of various government policies on economic growth would be considered:

A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. What is the marginal cost of producing the computers that Pam can assemble during her 3ʳᵈ hour of work?

Refer to the accompanying table below. The marginal cost of the 3?? unit of this activity is:   $\begin{array} { | c | r r | r | } \hline \text { Units of Activity } & { \text { Tatal Cast } } & { \text { Tatal Benefit } } \\\hline 0 & \$ 0 & \$ 0 \\\hline 1 & \$ 30 & \$ 100 \\\hline 2 & \$ 40 & \$ 160 \\\hline 3 & \$ 60 & \$ 190 \\\hline 4 & \$ 100 & \$ 210 \\\hline 5 & \$150 & \$ 220 \\\hline 6 &\$210& \$ 225 \\\hline\end{array}$  

You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon?

One thing that distinguishes normative economic principles from positive economic principles is that:

With ATMs, it is possible to retrieve cash from the bank at any time. One hundred years ago, one could only get cash from the bank during business hours, say, 9 am to 3 pm. The present availability of 24-hour service has arisen because:

Which branch of economics is most likely to study differences in countries' growth rates?

Macroeconomics differs from microeconomics in that macroeconomics focuses on:

The accompanying table below shows the relationship between the number of times you get your car washed each month and your total monthly benefit from car washes. Each car wash costs $15.    $\begin{array} { | c | c | } \hline \text { Number af Car Washes Per Month } & \text { Tatal Munthly Benefit fram Car Washes } \\\hline 0 & \$ 0 \\\hline 1 & \$ 20 \\\hline 2 & \$ 36 \\\hline 3 & \$ 48 \\\hline 4 & \$ 56 \\\hline 5 & \$ 60 \\\hline\end{array}$   How many times a month should you get your car washed?

Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is:

If individuals are rational, they should choose actions that yield the:

The Scarcity Principle applies to:

Pat can either drive to work, which takes half an hour and uses $1.50 worth of gas, or take the bus, which takes an hour and costs $1.00. How should Pat get to work?

Refer to the accompanying table below. The marginal benefit of the 5?? unit of activity is: $\begin{array} { | c | r r | r | } \hline \text { Units of Activity } & { \text { Tatal Cast } } & { \text { Tatal Benefit } } \\\hline 0 & \$ 0 & \$ 0 \\\hline 1 & \$ 30 & \$ 100 \\\hline 2 & \$ 40 & \$ 160 \\\hline 3 & \$ 60 & \$ 190 \\\hline 4 & \$ 100 & \$ 210 \\\hline 5 & \$150 & \$ 220 \\\hline 6 &\$210& \$ 225 \\\hline\end{array}$