Costs
If you buy a motorcycle for $1000, and discover you hate riding it, then you should sell it for?
The best offer you can get
If the marginal benefit Alex receives from his 3rd slice of pizza is $5, what is the most he is willing to pay for the pizza?
$5
True or False, trading can make a country richer?
True, trading moves goods and services from low valuing individuals to high valuing individuals
Economists make decisions using total benefit and sunk cost
Economists make decisions using MARGINAL benefit and MARGINAL cost
The cost of skipping a class is:
a.) higher on the day of an exam
b.) depends on how much you like the class
c.) depends on how much tuition money you paid
d.) all of the above
D.) all of the above!
Many promising young tennis athletes choose not to go to college, but instead play professionally during their late teens instead. Their __________ of going to college is higher than the average teenager's
opportunity cost
Alex's TOTAL ENJOYMENT from pizza is $14 after his first slice, $26 after his second slice, $36 after his 3rd slice, $44 after his 4th slice, $50 after his 5th slice, $54 after his 6th slice, and $56 after his 7th slice. When the marginal cost of pizza is $5 per slice how many slices of pizza will Alex eat?
5 slices of pizza
A country has __________ when it can produce more of both kinds of goods than its trading partner
Absolute Advantage
Both the United States and France make cars and airplanes. The US can make 10,000 planes in a year or 100,000 cars in a year. France can make 5,000 planes in a year or 5,000 cars in a year. Therefore the US has comparative in both airplanes and cars
France has the comparative advantage in airplanes. For every 1 plane that France chooses to build, they give up building 1 car. For every 1 plane the US builds they give up building 10 cars.
someone who, when confronted by a choice says 'It's simple, do both" is:
a.) a high demander
b.) an inefficient supplier
c.) does not understand opportunity costs
d.) is a go-getter
C.) Does not understand opportunity costs
Opportunity cost and ____________cost are often the same thing
Marginal cost
England produces both beans and fish. In one day they can produce 5 tons of beans or 8 tons of fish. What is the opportunity cost in terms of tons of fish in making 1 tons of beans?
To make 1 ton of beans, England must sacrifice 1.6 tons of fish
True or False, the only way for a nation to get comparative advantage in the production of that good or service is to be able to produce more of said good or service
False, they could also produce less of the other product(s) they produce, or their trading partner could get worse at producing the good or service. Their trading partner could also get way better at producing another good or service
When the marginal cost of pizza is $6 a slice, and Alex's total enjoyment is $11 after his first slice of pizza, $20 after his second slice, $27 after his third slice, $32 after his fourth slice, and $35 after his 5th slice, Alex will eat all 5 slices.
When the marginal cost of pizza is $6 a slice, and Alex's total enjoyment is $11 after his first slice of pizza, $20 after his second slice, $27 after his third slice, $32 after his fourth slice, and $35 after his 5th slice, Alex stop eating after his third slice, because the marginal benefit of eating a 4th slice of pizza ($5) is less than the marginal cost($6).
Which of the following are marginal costs associated with studying economics for an
extra hour?
a.) The videogame you would have otherwise played
b.) the costs of your textbook and tuition
c.) the costs of the time you have already spent studying
d.) All of the above
A.) The videogame you would have otherwise played
Economists make decisions using _____________ costs, and we know that_______________ costs cannot be recovered regardless of the decisions an individual or company make
marginal, sunk
In one day South Korea can make 1,000 cars and 3,000 cell phones. In one day the United States can make 15,000 cars and 15,000 cell phones. Who has comparative advantage and how will these countries trade
SK: Comparative advantage in cell phones
US: Comparative advantage in cars
US will trade cars for SK cell phones
What does the area to the upper right hand area of our PPF represent?
The infeasible sets of goods
Diamonds are considered more valuable than water, because diamonds are a scarce resource
They are both scarce resources
Your comparative advantage as a house painter as opposed to a student:
a.) increases during exam week
b.) increases during summer vacation
c.) depends on how good you are at painting houses
d.) none of the above
B.) Increases during summer vacation
A pharmaceutical company has been researching and developing a new drug for an Alzheimer’s disease treatment. Lab A has spent $100 thousand researching “forget-me-not”, a drug that will be able to hit the market for another $75 thousand worth of testing. Lab B has spent only $30 thousand researching “always-sharp”, a drug that will be able to hit the market for another $80 thousand. Both drugs will generate the same gross revenue for the company. Which drug should the lab finish developing and release?
Lab A's "forget-me-not"
It takes France 27 days to make 1 wheel of cheese and 45 days to make 1 bottle of wine. What is the opportunity cost of wine in terms of cheese?
France can get 3 more bottles of wine by giving up 5 wheels of cheese
If one nation's PPF is steeper than its trade partner (it rises more than it runs), then it has competitive advantage for the good on which axis
Y axis (vertical axis)
You buy bitcoin one day for $5, and then the next day the value rises to $500 for your coin. You were lucky because your opportunity cost of the bitcoin is so much lower than the people paying $500 for a coin today
You have the same opportunity cost as the people buying the $500 bitcoins today, because you could either keep it for yourself, or sell
If England can make 10 umbrellas or 5 smoked fish in a day while Norway can make 5
umbrellas or 5 smoked fish, a trade that would make both countries better off would be:
a.) 1 umbrella for 2 fish
b.) 1.5 umbrella for 1 fish
c.) 2 umbrellas for 1 fish
d.) No trade would make these countries better off
B.) 1.5 umbrellas for 1 fish