IowaEconHWs

# IowaEconHWs - Econ 102 Section 1 Homework#1 Due May 29,2009...

This preview shows pages 1–3. Sign up to view the full content.

Econ 102 Section 1 Homework #1 Due: May 29,2009 1. The cost-benefit principle indicates that an action should be taken A. if the total benefits exceed the total costs. B. if the average benefits exceed the average costs. C. if the net benefit (benefit minus cost) is zero. D. if the extra benefit is greater than or equal to the extra costs. 2. The 7th glass of soda that Tim consumes will produce an extra benefit of 10 cents and has an extra cost of zero (Tim is eating at the cafeteria). The cost-benefit principle predicts that Tim will A. realize he has had too much soda to drink and go home. B. drink the 7th glass and continue until the marginal benefit of drinking another glass of soda is zero. C. volunteer to empty out the fountain. D. not drink the 7th glass. 3. Relative to a person who earns minimum wage, a person who earns \$30 per hour has A. a lower opportunity cost of working longer hours. B. a higher opportunity cost of taking a day off. C. a lower opportunity cost of driving farther to work. D. the same opportunity cost of spending time on leisure activities. 4. Pat earns \$25,000 per year (after taxes), and Pat's spouse, Chris, earns \$35,000 (after taxes). They have two pre-school children. Childcare for their children costs \$12,000 per year. Pat has decided to stay home and take care of the children. Pat must A. value spending time with the children by more than \$25,000. B. value spending time with the children by more than \$12,000. C. value spending time with the children by more than \$13,000. D. value spending time with the children as much than does Chris. 5. Jody has purchased a non-refundable \$25 ticket to attend a Savage Garden concert on Friday evening. Subsequently, she is asked to go to dinner and dancing at no expense to her. If she uses cost-benefit analysis to choose between going to the concert and going on the date, she should A. include only the entertainment value of the concert in the opportunity cost of going on the date. B. include the cost of the ticket plus the entertainment value of the concert in the opportunity cost of going on the date. C. include only the cost of concert ticket in the opportunity cost of going on the date. D. include neither the cost of the ticket nor the entertainment value of the concert in the opportunity cost of going on the date. 6.To say that an individual possesses an absolute advantage in the production of software means that that individual A) has a lower opportunity cost of producing software. B) can produce more and/or higher quality software in a given amount of time. C) was the first to create the software. D) charges the lowest price for software. E) has the most venture capital. 7.If Scout has an absolute advantage over Dill, A) Scout has more money than Dill. B) the problem of scarcity applies to Dill but not to Scout.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
C) the problem of scarcity applies to Scout, but not to Dill.
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 04/09/2011 for the course ECON 201 taught by Professor Joyce during the Spring '07 term at Drexel.

### Page1 / 58

IowaEconHWs - Econ 102 Section 1 Homework#1 Due May 29,2009...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online