Macroeconomics - Macroeconomics Unit 1 Answers Chapter 1...

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Macroeconomics Unit 1 Answers Chapter 1 First Principles Questions 2. Describe some of the opportunity costs when you decide to do the following. a. Attend college instead of taking a job b . Watch a movie instead of studying for an exam c. Ride the bus instead of driving your car Answer 2. a. One of the opportunity costs of going to college is not being able to take a job. By choosing to go to college, you give up the income you would have earned on the job and the valuable on-the-job experience you would have acquired. Another opportunity cost of going to college is the cost of tuition, books, supplies, and so on. On the other hand, the benefit of going to college is being able to find a better, more highly paid job after graduation in addition to the joy of learning. b. Watching the movie gives you a certain benefit, but allocating your time (a scarce resource) to watching the movie also involves the opportunity cost of not being able to study for the exam. As a result, you will likely get a lower grade on the exam—and all that that implies. c. Riding the bus gets you where you need to go more cheaply, but probably not as conveniently, as driving your car. That is, some of the opportunity costs of taking the bus involve having to walk from the bus stop to where you need to go rather than parking your car right outside the building, waiting for the bus, and probably a slower journey. If the opportunity cost of your time is high (your time is valuable), these costs may be prohibitive. Question 5. In the following examples, state how you would use the principle of marginal analysis to make a decision. a.
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This note was uploaded on 08/05/2008 for the course BU 204-05 taught by Professor Hill during the Spring '08 term at Kaplan University.

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Macroeconomics - Macroeconomics Unit 1 Answers Chapter 1...

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