c.
Marginal principle
d.
Interdependence principle
ANSWER:
c
122. Consider your decision to attend class each day or skip it. Which of the four core principles of economics applies to the notion that attending class will most likely help you understand the material better and perform well on future exams?
a.
Cost-benefit principle
b.
Opportunity cost principle
c.
Marginal principle
d.
Interdependence principle
ANSWER:
d
123. Consider your decision to attend class each day or skip it. Which of the four core principles of economics applies to the notion that by attending class you are not doing the next best activity you would prefer to do, such as napping or going to the gym?
a.
Cost-benefit principle
b.
Opportunity cost principle
c.
Marginal principle
d.
Interdependence principle
ANSWER:
b
124. Consider your decision to attend class in college or skip it. Which of the four core principles of economics applies to the notion that attending class today will require you to give up time and energy to pay attention, but in doing so you will gain a better understanding of the material?
a.
Cost-benefit principle
b.
Opportunity cost principle
c.
Marginal principle
d.
Interdependence principle
ANSWER:
a
125. Consider your decision to attend class in college or skip it. Which of the four core principles of economics applies to the notion that each additional class you attend helps increase your likelihood of mastering the material?
a.
Cost-benefit principle
b.
Opportunity cost principle
c.
Marginal principle
d.
Interdependence principle
ANSWER:
c
Essay
126. Roger has inherited his grandmother's home, which he values at $150,000. He decides that he might be willing to sell it, so he lists it on Zillow as for sale by owner for $185,000. Donna is interested in the home and willing to pay $200,000 for it. Would Roger and Donna want to voluntarily engage in this exchange? How much economic surplus is created for each of them as a result of this exchange? What is the total surplus?
ANSWER:
Roger and Donna will engage in a voluntary economic exchange in this situation. Roger will receive a $35,000 economic surplus from the exchange, and Donna will receive an economic surplus of $15,000. The total economic surplus for the exchange is $50,000.
127. Roger has inherited his grandmother's home, which he values at $150,000. He decides that he might be willing to sell it, so he lists it on Zillow as for sale by owner for $185,000. Donna is interested in the home and willing to pay $175,000 for it. Would Roger and Donna want to voluntarily engage in this exchange? How much economic surplus is created for each of them as a result of this exchange? What is the total surplus?
ANSWER:
Roger and Donna will not engage in a voluntary economic exchange in this situation. Although Roger would receive a $35,000 economic surplus from the exchange, Donna would receive a negative economic surplus of $10,000. Thus, Donna does not want to engage in the exchange even though there would be a total economic surplus of $25,000.
128. Bruce has midterm exams tomorrow in economics and chemistry. He only has four hours left to study tonight. The accompanying table provides the combinations of time spent studying economics and chemistry and his expected exam scores.
Suppose that Bruce spends the first three hours studying economics. What is the opportunity cost of spending a fourth hour? If Bruce's goal is to maximize his combined scores, how many hours should he spend studying economics, and how many hours should he spend studying astronomy?
ANSWER:
The opportunity cost to Bruce of spending a fourth hour studying economics is 10 points on his chemistry exam. That is, if he spends the fourth hour studying chemistry, he will improve his chemistry grade by 10 points. If Bruce wants to maximize his combined score of the two exams, he should study two hours for each exam.