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Exam 1: Thinking Like an Economist

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Question 1

Multiple Choice

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Dean decided to play golf rather than prepare for tomorrow's exam in economics.One can infer that:

A) Dean has made an irrational choice.
B) Dean is doing poorly in his economics class.
C) the economic surplus from playing golf exceeded the surplus from studying.
D) the cost of studying was less than the cost of golfing.

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Question 2

Multiple Choice

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Economic models are intended to:

A) apply to all examples equally well.
B) eliminate differences in the way people behave.
C) generalize about patterns in decision-making.
D) distinguish economics students from everyone else.

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Question 3

Multiple Choice

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A firm employs Pam to assemble personal computers.Pam can assemble 1 computer if she works 1 hour,4 computers in 2 hours,8 computers in 3 hours,10 computers in 4 hours,and 11 computers in 5 hours.Each computer consists of a motherboard that costs $200,a hard drive that costs $100,a case that costs $20,a monitor that costs $200,a keyboard that costs $60 and a mouse that costs $20.The cost of employing Pam is $40 per hour. The firm sells each computer for $620.How many hours should the firm employ Pam to maximize its benefit from her employment?

An economic naturalist is described as someone who:

The average benefit of an activity is the:

You paid $35 for a ticket (which is non-refundable) to see SPAM,a local rock band,in concert on Saturday.(Assume that you would not have been willing to pay any more than $35 for this concert. ) Your boss called and she is looking for someone to cover a shift on Saturday at the same time as the concert.You will have to work 4 hours and she will pay you time and a half,which is $9/hr. What is the opportunity cost of going to the concert?

The range of topics or issues that fit within the definition of economics is:

Studying how Pat allocates her time between teaching classes and assisting undergraduate students is an example of:

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?

Moe has a big exam tomorrow.He considered studying this evening,but decided to go out with Curly instead.Since Moe always chooses rationally,it must be true that:

You had to pay $600 (non-refundable) for your meal plan for Fall semester which gives you up to 150 meals.If you eat only 100 meals,your average cost for a meal equals:

If the marginal costs of 1,2,and 3 hours of talking on the phone are $50,$75,and $105 respectively,then the total costs are of 1,2 and 3 hours of talking on the phone are:

You save $10 on gas every week since you live close to the bus stop.You have class five days a week.What is your average benefit per day for living close to the bus stop?

An editorial in the paper argues that students should only be allowed to attend school so long as the marginal cost of educating that student is less than the marginal benefit of that student's education.The writer's reasoning is an application of:

You own a pizza shop called "Pizzas'R' Us".Currently you are paying your cooks an hourly wage of $20.You sell a medium pizza for $10.By hiring more cooks,you can increase your pizza production as shown in the following table. $\begin{array} { | l | l | } \hline \begin{array} { l } \text { Number of } \\\text { cooks }\end{array} & \begin{array} { l } \text { Total production of } \\\text { pizzas each hour }\end{array} \\\hline 0 & 0 \\\hline 1 & 4 \\\hline 2 & 7 \\\hline 3 & 9 \\\hline 4 & 10 \\\hline 5 & 10 \\\hline\end{array}$ How many cooks should you hire to maximize your net benefit?

A study that deals with the salaries of university professors would be considered:

Sally earned $25,000 per year before she became a mother.After she became a mother,she told her employer that her opportunity cost of working is now $50,000,and so she is not willing to work for anything less.Her decision is based on:

If all the world's resources were to magically increase a hundredfold,then:

Amy is thinking about going to the movies tonight.A ticket costs $7 and she will have to cancel her dog-sitting job that pays $30.The cost of seeing the movie is:

Suppose a person makes a choice that seems inconsistent with the cost-benefit principle.Which of the following statements represents the most reasonable conclusion to draw?