ECON 101 Study Guide - Midterm Guide: Hot Dog Bun, Marginal Revenue, Marginal Utility

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ECON 101 Full Course Notes

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Ex) coffee shop sells for , you should buy if the benefit to you is at least , you really like coffee and this coffee shop makes good coffee, so you"ll buy it. But your friend who hates coffee gets no benefit so she won"t buy it. Both are responding to the balance of benefits, minus costs: the opportunity cost principle: the true cost of something is the most valuable alternative you must give up to get it. Your decisions should reflect this opportunity cost, rather than just the out-of-pocket financial costs. Costs of her choice costs of her next best alternative = opportunity cost: the marginal principle: break how many decisions down into a series of smaller, or marginal, decisions. Evaluate whether the extra benefit from hiring one more worker exceeds the extra cost of that extra worker. Marginal benefit the extra benefit you get from one more worker. Marginal cost extra cost of that worker.

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Marginal Benefit. List and explain at least one example where you actually have used or will use the marginal principle in your life (personal or professional). Here is an example of how I used this principle. I considered pursuing my doctorate degree. Having a doctorate would increase my salary here at Ohlone College. However, obtaining the doctorate has costs associated with it. When I looked at the marginal cost of getting one more degree with the marginal benefit of one more degree, I calculated that the marginal benefit was higher than the marginal cost, so I chose to go on for my doctorate.

NOTE: Do not use the example of pursuing a college degree, since I just covered that one. Come up with a different example.

IMPORTANT: The marginal principle applies to purchasing MORE of something you already have. In my example, I already have two college degrees. The decision is about whether to obtain another degree. Do not give an example of deciding whether or not to buy something you do not have. For example, deciding to buy a car if you do not already have one is not an example of marginal cost. That is an example of opportunity cost.

lilacmanatee362

Can you solve them and tell me if youre sure 100% 100% 100%

Question 1 (1 point)

If two variables move together but are otherwise unrelated, we have

Question 1 options:

a fallacy of composition.

an econometric model.

a spurious correlation.

an efficiency problem.

evidence of a weak correlation but strong causation.

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Question 2 (1 point)

The Latin expression "ceteris paribus": is essential in ______.

Question 2 options:

collecting data.

identifying sunk costs.

evaluating theories.

recognizing scarcity.

developing spurious relationships.

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Question 3 (1 point)

Opportunity cost is best defined as

Question 3 options:

marginal cost minus marginal benefit.

the time spent on an economic activity.

the value of the best forgone alternative.

the monetary cost of an economic decision.

marginal cost plus marginal benefit.

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Question 4 (1 point)

A cost that cannot be recovered at the time a decision is being made is termed a(n)

Question 4 options:

marginal cost.

scarcity cost.

sunk cost.

average cost.

opportunity cost.

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Question 5 (1 point)

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

Question 5 options:

$50, $150, and $315.

$50, $41.67, and $115.

$50, 125, and $230.

$50, $175, and $405.

impossible to calculate with information given.

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Question 6 (1 point)

In general, individuals should specialize in producing those goods for which they

Question 6 options:

can produce more quickly than others.

can produce less quickly than others.

have the lowest opportunity cost compared to others.

have the highest opportunity cost compared to others.

have an average opportunity cost.

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Question 7 (1 point)

The extra benefit that comes from an extra unit of activity is called the _________ of the activity.

Question 7 options:

benefit

marginal benefit

marginal cost

average benefit

reservation benefit

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Question 8 (1 point)

The marginal benefit of an activity is the

Question 8 options:

same as the total benefits of the activity.

total benefit divided by the level of the activity.

change in the activity divided by the change in benefits.

extra benefit associated with an extra unit of the activity.

total benefit divided by the change in the level of the activity.

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Question 9 (1 point)

The fundamental problem that is studied in economics is that

Question 9 options:

consumers have limited wants in the face of unlimited resources.

markets should function without government interference.

Canada is too wealthy.

consumers have unlimited wants in the face of limited resources.

there are unlimited resources.

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Question 10 (1 point)

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

Question 10 options:

limited to market activities, e.g., buying soap.

limited to individuals and firms.

extremely wide, requiring only the ideas of choice and scarcity.

limited to governments and nations.

very limited.

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Question 11 (1 point)

When economists make predictions using the framework of a given economic model, it is usually based on

Question 11 options:

personal experiences.

important relationships between particular variables.

mathematical abstractions.

political implications.

the profit-maximizing objective.

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Question 12 (1 point)

The cost of spending an evening partying instead of studying economics is

Question 12 options:

the resulting decrease in the test score in Economics.

the time spent at the party.

the score of the test.

the cost of the textbook.

university tuition.

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Question 13 (1 point)

As one progresses from a one-person economy to a large, multi-person economy, the shape of production possibilities curve changes from

Question 13 options:

downward sloping to upwards sloping.

linear to convex (bowed into the origin).

concave (bowed out from the origin) to linear.

convex (bowed into the origin) to concave (bowed out from the origin).

linear to concave (bowed out from the origin).

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Question 14 (1 point)

Which is NOT a sunk cost?

Question 14 options:

Monthly rent of $1,000 contractually specified in a one-year lease.

An insurance premium of $50 per year, paid last month.

An attorney's retainer of $50,000 per year.

A worker's wage of $15 per hour.

A non-refundable deposit for a tender.

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Question 15 (1 point)

"We should support government intervention because the market produces undesirable outcomes" is an example of

Question 15 options:

positive economics.

normative economics.

comparative economics.

negative economics.

formative economics.

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amberchimpanzee966

Select all of the following that are best described as sunk costs.

A.The cost of an expensive pair of shoes that I want, but will likely never wear.

B.The non-refundable deposit made a month ago to hold your spot on a rafting trip.

C.The additional money you must pay if you actually go on the rafting trip.

D.The morning run that I miss out on so that I have time to go to Starbucks before class

Imagine Germany and Greece produce only beer and olives. Germany can produce at most 500 kegs of beer or 2000 jars of olives. Greece has fewer workers and a 4 day work week, but they can still produce at most either 100 kegs of beer or 1000 jars of olives. Which of the following is false.

A.Germany has the absolute advantage in producing olives.

B.Greece has the comparative advantage in producing olives.

C.Germany has the comparative advantage in producing beer.

D.Greece does not have a comparative advantage in beer or olives.

Economic thought suggests that when making a decision you should:

A.Compare the opportunity cost with the true economic cost and choose the lowest.

B.Compare the marginal benefit (MB) with the marginal cost (MC) and only do something if MB>MC for that choice.

C.Always buy the cheapest option.

D.Go for the option with lowest average cost relative to average benefit.

A point lying exactly on the production possibility frontier is:

A.an efficient point

B.a super-efficient point

C.a non-attainable point

D.an inefficient point

Which of the following is the best example of a ânormativeâ economic question?

A.What percentage of the wealth is owned by the wealthiest 1% of the US population?

B.Is the income distribution in the United States fair?

C.How much would the economy grow if a new oil pipeline was approved?

D.What will the employment impacts be from a new, higher, minimum wage?

You are on a cruise in the Caribbean Sea, which cost $1,000. On this particular day you have the choice between two activities, both of which would provide marginal mental benefits to your state of mind. The first is a scuba diving trip whose cost was included in the price of the cruise (you get to swim with a school of hammerheads). The second is a shopping spree on St. Thomas that would cost you $500. Which costs and benefits (select all that apply) should you consider when deciding which activity to undergo?

The marginal benefits of the scuba trip.

The $500 cost of the shopping trip.

The marginal benefits of the shopping trip.

The $1,000 cost of the cruise.

All of the above.

ECON 101 Study Guide - Midterm Guide: Hot Dog Bun, Marginal Revenue, Marginal Utility

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