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Study_Guide_-_Exam_1__ECO_110_

# Study_Guide_-_Exam_1__ECO_110_ - Study Guide Exam 1(ECO 110...

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Study Guide - Exam 1 (ECO 110) Student: _______________________________________________________________________________________ 1. If one fails to account for opportunity costs in decision making, then applying the cost-benefit rule will be flawed because A. the benefits will be overstated. B. the costs will be understated. C. the benefits will be understated. D. the costs will be overstated. 2. You had to pay \$600 (non-refundable) for your meal plan for Fall semester which gives you up to 150 meals. If you eat only 100 meals, your average cost for a meal equals 3. Jack has a ticket to see Bo Bice for which he paid \$30 yesterday. He takes an unpaid day off from work to get ready for the concert. When he arrives at the concert, 5 different people offer him \$70 for his ticket. The cost to Jack of seeing Bo Bice is 4. An editorial in the paper argues that students should only be allowed to attend school so long as the marginal cost of educating that student is less than the marginal benefit of that student's education. The writer's reasoning is an application of 5. Josh wants to go to the football game this weekend, but he has a paper due on Monday. It will take him the whole weekend to write the paper. Josh decided to stay home and work on the paper. According to the scarcity principle, the reason Josh didn't go to the game is that A. Josh prefers schoolwork to football games. B. writing the paper is easier than going to the game. C. Josh doesn't have enough time for writing the paper and going to the game. D. it's too expensive to go to the game.

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6. Tony notes that an electronics store is offering a flat \$20 off all prices in the store. Tony reasons that if he wants to buy something with a price of \$50, that it is a good offer, but if he wants to buy something with a price of \$500, it is not a good offer. This is an example of A. inconsistent reasoning; saving \$20 is saving \$20. B. the proper application of the cost-benefit principle. C. rational choice because in the first case he saves 40% and in the second case he saves 4%. D. marginal cost equals marginal benefit thinking. 7. The logical implication of the scarcity principle is that
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Study_Guide_-_Exam_1__ECO_110_ - Study Guide Exam 1(ECO 110...

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