Margins Margins Margins
Economic Systems/ PPC
OC/Marginals
Absolute And Comparative Advantage
Anything Goes
100
why individuals and societies must make choices when presented with alternatives?
What is scarcity
100
Compare and Contrast Government in a market economy and a command economy
What is the government has no role in a market economy and complete control in a command economy
100
The additional satisfaction received from consuming an additional unit of a good is called the
What is marginal utility
100
If Nation X produces coffee at a higher opportunity cost than Nation Y who has a comparative advantage in coffee
Who is Nation Y
100
Suppose that Habib has a weekly fixed budget and spends it all on music downloads and snacks. At his current combination of consumption, the marginal utility of the last dollar spent on music downloads is greater than the marginal utility of the last dollar spent on snacks. How can Habib maximized his utility?
he can increase his total utility by purchasing more music downloads and fewer snacks.
The utility-maximizing condition is not fulfilled. Utility maximization requires that the marginal utility of the last dollar spent on music downloads must equal the marginal utility of the last dollar spent on snacks. He can maximize his utility by purchasing more music downloads and fewer snacks. Purchasing more music downloads will reduce the marginal utility of music downloads, decreasing the marginal utility per dollar, and reducing the number of snacks increases the marginal utility of snacks, increasing the marginal utility per dollar; the net impact will be to increase total utility.
200
Oren’s father tells Oren he can have one dessert after dinner. He can choose from a scoop of ice cream, a slice of apple pie, a cup of chocolate pudding, or a piece of fruit. Oren prefers chocolate pudding to a piece of fruit; he prefers apple pie to chocolate pudding; and he prefers ice cream to apple pie. If Oren chooses a scoop of ice cream, what is his opportunity cost?
Apple pie is the next best alternative to ice cream. By choosing the ice cream, Oren gave up the opportunity to enjoy apple pie, the next best alternative.
200
Which of the following economic systems primarily relies on prices for allocating resources and goods?
What is a market economy
200
Carlos has a van with 20 seats and charges $10 per person per ride to the airport from downtown. Carlos’ cost of the trip is $140 for any number of passengers. On one trip, Carlos has 19 seats filled when a person offers him $5 for the last seat. Should Carlos accept the offer?
Yes because Marginal Benefit>Marginal Cost
MB=5 MC= 0
200
Nation Alpha can produce either 3 units of good X or 1 unit of good Y with one hour of labor, whereas nation Beta can produce either 4 units of good X or 2 units of good Y with one hour of labor. Assuming that labor is the only input, who has an absolute advantage in the production of X
What is Beta has an absolute advantage in X
Beta can make 4 X Alpha can only make 3
200
The study of economics exists because people are confronted with the basic problem of
What is scarcity, unlimited wants and limited resources
300
A power company decides to use wind turbines to provide electricity instead of coal. Which basic economic question does this decision answer in a free market economy?
What is How will goods or services be produced?
300
In a command economy, the quantity of computers produced would be determined by
Who is the government
300
First person to hit buzzer 300 free points
LETS GO
300
Nation Aga can produce either 3 units of good XX or 1 unit of good YY with one hour of labor, while nation Kaza can produce either 4 units of good XX or 2 units of good YY with one hour of labor. Assuming that labor is the only input, mutually beneficial exchange can take place between Aga and Kaza if the terms of trade are
What is Aga exchanges 2.5 units of good X for 1 unit of good Y from Kaza.
Kaza’s opportunity cost of producing 1 unit of Y is 2 units of X and Aga’s opportunity cost of producing 1 unit of Y is 3 units of X; thus, exchanging 1 unit of YY for 2.5 units of X is beneficial to both nations.
300
Cell Phone Unit of Lumber
Estonia 20 hours 55 hours
Finland 20 hours 44 hours
Who has an absolute advantage in production of lumber?
What is Finland can produce a unit of lumber with fewer hours of labor than Estonia and therefore has an absolute advantage in producing lumber.
400
If the price of an apple is $0.50, the marginal utility per dollar spent on the fifth apple is:
Number of Apples Total Utility
2 130
3 180
4 220
5 250
6 270
7 280
What is The marginal utility per dollar spent on the fifth apple is 250−220/0.50=60.
400
Point F is
What is unattainable
400
An opportunity cost is entailed in which of the following situations?
A student decides to attend college full-time.
A family uses its $20,000 savings to purchase an automobile.
A farmer decides to grow more wheat and less corn.
What is all 3
400
Assume both Italy and Greece produce only two goods: wine and olive oil. If Italy holds a comparative advantage in the production of wine, then who has the absolute advantage in the production of wine
Who is Italy
400
What is the optimal number of playgrounds to maximize net benefits?
Number of Playgrounds Total Cost($)Total Benefit 1 120,000, 30,000 2 50,000 70,000 3 80,000 105,000 4 110,000 140,000 5 160,000 150,000 6 170,000 165,000
What is Building 4 playgrounds maximizes net benefits
(net benefits = total benefits - total costs)
= $140,000-$110,000 = $30,000)
500
The marginal utility per dollar spent on the last orange consumed is 75. If the price of an apple is $0.50, how many apples would Johnny have to consume before he considers purchasing another orange?
Number of Apples Total Utility
2 130
3 180
4 220
5 250
6 270
7 280
What is The marginal utility per dollar spent on the fourth apple is (220−180)/$0.50=80
This is the last apple that has a marginal utility per dollar spent that is greater than 75.
500
If the two countries engage in trade who should make what
What is Country Y should make Cars and Country X should make planes
Y 1C=0.6P- 1P=1.5C
X1C=2P 1P=0.5C
500
Karen works part-time at a local convenience store and earns $10 per hour. She wants to spend next Saturday afternoon attending a music concert. The full price of a concert ticket is $75, but Karen was able to get a discounted price of $50 from a friend who purchased the ticket but has become unable to attend. If Karen took 4 hours off from her job to attend the concert, what was her opportunity cost of attending the concert?
What is $90
500
Who should make which good?
Omega should make food
Gamma 1F=0.9C
Omega 1F=0.6
Gamma should make clothes
Omega 1C=1.1 F
Gamma 1C=1.6F
500
The opportunity cost of increasing the production of good Y from 0 to 200 is
What is 20 Units of X