John (J.C.) Stevens
EC205L- Section 216
Problem Set #1
This problem set is due at the beginning of class on 1/27/2005.
You may work with one other person.
You should work
only
with that partner—that
means two groups should not get together and work as a team of four.
Please answer all questions to the best of your ability.
Circle the multiple-choice answer
of your choice, and then explain why your answer is correct, or give an example that
proves your answer.
It is possible to earn partial points, so do the best you can.
NO CREDIT WILL BE GIVEN FOR ONLY SELECTING A MULTIPLE
CHOICE ANSWER.
1.
If you choose to play tennis on Monday morning and the next best use for your time is
studying that morning,
a)
you do not have enough information to determine the opportunity cost of
playing
tennis in the morning.
b)
the opportunity cost of playing tennis will be zero.
c)
studying that morning is the benefit of playing tennis.
d)
the opportunity cost of playing tennis is the morning of study sacrificed.
D is the correct answer, because opportunity cost is defined as
the cost of choosing one option
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