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Econ 302 Homework 1

# Econ 302 Homework 1 - Chapter 1 Questions for Review 2 The...

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Chapter 1 Questions for Review 2. The roommate should not take this his tuition payment into account if it is non refundable because it is a sunk cost. 3. Three activities that are accompanied by external costs are burning garbage, dumping waste into the ocean, and playing loud music late at night. Burning garbage clears it for the person who is responsible for it, but pollutes the air. Dumping waste rids the person of it, but pollutes the ocean. Playing loud music would be enjoyable to the person listening to it, but annoying to the person’s neighbors. Chapter 1 Problems 2. Tom would have to pay Dick the opportunity cost that he would lose giving his money away. He would give him 200 dollars in interest because he could have doubled his money growing mushrooms instead. 4. The cost of taking the bus in \$260. The cost of driving is \$120+20+110=\$240. The rest of the costs associated with the car are sunk costs. So, you should drive. 5.

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Econ 302 Homework 1 - Chapter 1 Questions for Review 2 The...

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