homework1-2006

homework1-2006 - Problem Set Number 1, Economics 2020 Dr....

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Problem Set Number 1, Economics 2020 Name ____________________ Dr. Patricia A. Duffy Due Date: August 31, 2006. 1) 3 points each Provide the term for the definition. a) The value of the next-best alternative that must be forgone (given up) to undertake an activity __________________________________ b) A cost already incurred so it is not recoverable and no future decision can return that cost to you ____________________________________________ c) The increase in total cost, which results from carrying out one additional unit of an activity _________________________________________________ d) The total benefit of undertaking n units of an activity divided by n ____________________ e) One person has a ____________________________ over another if his opportunity cost of performing a task is lower than the other person’s opportunity cost. 2) 10 points You won a free pass to see a Rolling Stones concert (which has no resale value). Aerosmith is performing on the same night and is your next-best alternative activity. Tickets to see Aerosmith cost $80 (your cost). You would be willing to pay up to $100 to see Aerosmith (your benefit). Assume there any other costs of seeing either band are identical. Based on this
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homework1-2006 - Problem Set Number 1, Economics 2020 Dr....

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