This preview shows pages 1–2. Sign up to view the full content.
ECON 256: Intermediate Microeconomics
Short Assignment: 1
Fall 2010
1
Answer Key
Due Date: Tuesday, September 07, 2010
1. (Textbook Problem Question 1) Chris has a flexible summer job. He works every day but
is allowed to take a day off anytime he wants. Of course, if he takes a day off, he doesn’t get
paid. His friend Don suggests they take off work on Tuesday and go to the local Six Flags
amusement park. The admission charge for the amusement park is $15 per person, and it
will cost them $4 each for gasoline and parking. Chris loves amusement parks and a day at
the park is worth $45. However, Chris also enjoys his job so much that he would actually be
willing to pay $10 per day to do it. (That is, a day’s work is worth $10 of satisfaction to
him.)
(a) If Chris earns $10 if he works, should he go to the amusement park? Explain.
Benefit = $45
Cost (including opportunity cost) = $19 (admission, gas, parking) + $10 (job enjoyment)
+ $10 (lost wages) = $39
Benefit > Cost: Go to the amusement park!
(b) If Chris earns $15 if he works, should he go to the amusement park? Explain.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
This is the end of the preview. Sign up
to
access the rest of the document.
 Fall '05
 ??
 Microeconomics

Click to edit the document details