Explain the concept of opportunity cost, and how it applies to your major at AU (i.e., apply the concept to a question or an issue you have studied). Identify the opportunity costs of going to college? Is room and board an opportunity cost? Why or Why not? Are AU Basketball tickets an opportunity cost? Why or Why not? Should transportation costs home for Thanksgiving be considered an opportunity cost? What would your answer depend on?

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Hubert KochLv2

1 Apr 2018

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You have tickets to a basketball game, which is an hourâs drive away. Thereâs a blizzard raging outside, and the game is being televised. You can sit warm and safe at home by a roaring fire and watch on TV, or you can bundle up, dig out your car, and go to the game. What do you do?

3a. What type of cost is your expenditure on tickets and why?

3b. Why is the cost of the ticket irrelevant to your current decision about whether to stay at home or go to the game? Explain.

3c. In general, in making a decision whether to attend the basketball game or not during a blizzard, does the person need to look at the benefits vs. the costs of attending the basketball game? If so, what are the benefits vs. the costs of attending the basketball game during a blizzard? In your opinion, should you attend the basketball game if a blizzard is raging outside? Why or why not? Explain.

Chapter 1

What determines whether or not a resource is scarce? Why is the concept of scarcity important to the definition of economics?

Discuss the impact of rational self-interest on each of the following decisions.

Whether to attend college full time or enter the workforce full time

Whether to buy a new textbook or a used one

Whether to attend a local college or an out-of-town college

The owner of a small pizzeria is deciding whether to increase the radius of delivery area by one mile. What considerations must be taken into account if such a decision is to increase profitability?

Chapter 2

Suppose you go to a restaurant and buy an expensive meal. Halfway through, despite feeling quite full, you decide to clean your plate. After all, you think, you paid for the meal, so you are going to eat all of it. Whatâs wrong with this thinking?

You can spend spring break either at home working for $80 per day for five days or go to Florida for the week. If you stay home, your expenses will total about $100. If you go to Florida, the airfare, hotel, food, and miscellaneous expenses will total about $700. Whatâs your opportunity cost of going to Florida?

Provide some examples of specialized markets or retail outlets. What makes the Web so conducive to specialization?

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.