129. Bruce has midterms tomorrow in economics and chemistry. He has only 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 two hours studying economics. What is the opportunity cost of spending a third 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 third hour studying economics is eight points on his chemistry exam. That is, if he spends three hours studying economics, he can study chemistry for only one hour. The marginal benefit to him of studying chemistry for a second hour is eight points. If Bruce wants to maximize his combined score of the two exams, he should study two hours for each exam.
130. Marie Johnston is a manager at a cell phone store and is making hiring decisions. The number of cell phones her store sells per day depends on the number of workers she hires, as shown in the accompanying table. She sells each cell phone for $300. Assuming that workers are paid $20 per hour and work eight hours, how many employees should Marie hire? What will be the total revenue of her store per day?
ANSWER:
Marie should hire five workers. Each additional worker she hires will be paid $160 per day, and the marginal benefit of the fifth worker is $300. The total revenue for her store each day will be $6,900.
131. Marie Johnston is a manager at a cell phone store and is making hiring decisions. The number of cell phones her store sells per day depends on the number of workers she hires, as shown in the accompanying table. She sells each cell phone for $200. Assuming that workers are paid $20 per hour and work eight hours, how many employees should Marie hire? What will be the total revenue of her store per day?
ANSWER:
Marie should hire five workers. Each additional worker she hires will be paid $200 per day, and the marginal benefit of the fifth worker is $200. The total revenue for her store each day will be $4,600.
132. Albert grows coffee beans and faces a decision about how many tons to produce. He can sell each ton of coffee for $2,000. The total cost of production depends on the number of tons he decides to produce, as shown in the accompanying table. How many tons of coffee beans should Albert produce?
ANSWER:
Albert should produce six tons of coffee beans. The marginal benefit to him of each ton of coffee beans is $2,000. The marginal cost of the sixth ton of coffee is $2,000. According to the Rational Rule, Albert should produce six tons of coffee beans.
133. Albert grows coffee beans and faces a decision about how many tons to produce. He can sell each ton of coffee for $1,500. The total cost of production depends on the number of tons he decides to produce, as shown in the accompanying table. How many tons of coffee beans should Albert produce?
ANSWER:
Albert should produce three tons of coffee beans. The marginal benefit to him of each ton of coffee beans is $1,500. The marginal cost of the third ton of coffee is $1,400. The marginal cost of the fourth ton of coffee is $1,600. According to the Rational Rule, Albert should produce three tons of coffee beans.
134. You are an engineer working at an engineering firm but are considering returning to school to get an MBA. You know that an MBA is required for any further advancement at your current firm. Describe four types of dependencies that will affect your decision, with at least one example for each.
ANSWER:
Four types of dependencies that will affect the decision include the following : dependencies between each of your individual choices (example), dependencies between people or businesses in the same market (example), dependencies between markets (example), and dependencies through time (example).
135. You are a college junior working as a summer intern at a firm. The firm is satisfied with your performance over the summer and offers you a job that does not require you to finish your degree. Describe four types of dependencies that will affect your decision to accept this job or return to school, with at least one example for each.
ANSWER:
Four types of dependencies that will affect the decision include the following : dependencies between each of your individual choices (example), dependencies between people or businesses in the same market (example), dependencies between markets (example), and dependencies through time (example).