3) a) Discuss the phrase there ain't no such thing as a free lunch (TANSTAAFL) in the context of opportunity costs. b) Discuss the cliché if something is worth doing, it is worth doing well in the context of marginal benefits and marginal costs.
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- 3. Marginal analysis produces more optimal outcomes when working with scarce resources. How?1. Scarcity, opportunity cost, and marginal analysis Caroline is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence: In order to swim for an hour, Caroline must take time away from work, where she earns $11 per hour. This is in addition to paying a $5 entrance fee for the pool. Which basic principle of individual choice do these statements best illustrate? O The cost of something is what you give up to get it. O Trade can make everyone better off. People usually exploit opportunities to make themselves better off. O Markets are usually a good way to organize economic activity.1. Working with Numbers and Graphs Q1 Suppose the marginal costs of reading are constant at $5 per hour, while the marginal benefits of reading decline (over time) as more reading is performed. In particular, suppose the following table contains the marginal benefit associated with various levels of hours spent reading. Time Spent Reading Marginal Benefits (Hours) (Dollars per hour) 8 3 12 Assume the marginal-benefit curve is a straight line through the two points described in the table. MARGINAL COST, MARGINAL BENEFIT ($ per hour of reading per week) On the following graph, use the blue points (circle symbol) to plot the marginal-benefit curve for reading. Next, use the orange points (square symbol) to plot the marginal-cost curve for reading. Finally, use the black point (plus symbol) to indicate the point corresponding to the efficient amount of reading (that is, the point at which the net benefits of reading are maximized). 00 32 N 0 2 3 + 6 9 12 15 18 21 READING (Hours per week)…
- 1. Scarcity, opportunity cost, and marginal analysis Musashi is training for a biathlon, a winter racing sport that combines cross-country skiing and rifle shooting. Consider the following scenario: Because his ski training sessions are helping him quickly improve at skiing, Musashi plans to reduce the time he spends training at the shooting range by an hour, and increase the time he spends skiing by an hour. However, his training partner says that he should pause all shooting practice and spend the entire 15 hours this week in the pool. Which basic principle of individual choice does Musashi's plan illustrate that his training partner's advice does not? Many decisions are made on the margin. People usually exploit opportunities to make themselves better off. Resources are scarce. All costs are opportunity costs.Which of the following is NOT the way you can understand interaction effects? a. by graphing the cell means b. through inspecting cell means c. through inspecting marginal means d. by a verbal description of resultsStephen and Rebecca both enjoy drinking coffee. The marginal benefit that each places on the coffee they drink is given in the following table: Number of cups of coffee First cup Second cup Third cup Marginal Marginal Benefit Benefit for for Rebecca ($) 10 a) $9 b) $7 8 Fourth cup Fifth cup 2 c) $5 d) $3 6 4 Stephen ($) 15 12 9 6 On a recent day on campus Rebecca purchased a cup of coffee and Stephen purchased three cups of coffee. What price for a cup of coffee would be consistent with this behaviour? 3
- Timothy quits his job which pays $65900 a year, to enrol in a 2 year graduate program. his annual expenses are $62600 for the tuition , $8400 for books, and $3500 for food. What is the opportunity cost for attending the graduate programe? What core principles are considered in Timothy's decision making? (i) Scarcity, Choice and Opportunity Cost (ii) Cost benefit analysis (iii) Incentive principle (iv) Diminishing returnsCan you please show the detailed steps involved that took you to the final answers so that I can understand? 1.Suppose the marginal costs (MC) of reading are constant & the marginal benefits (MB) of reading decline (over time). Initially, the MB of Reading are greater than the MC. Draw the MB curve and MC curve of studying, & identify the efficient amount of reading. Then explain why the efficient point is the point at which the net benefits of reading are maximized. ________________________________________________2. Using the diagram you drew in question 1, lower the marginal costs of reading and identify the new efficient amount of reading. Also, identify the additional net benefits derived as a result of the lower marginal cost of reading.6. Scarcity, opportunity cost, and marginal analysis Bob is training for a biathlon, a winter racing sport that combines cross-country skiing and rifle shooting. Consider the following scenario: In order to ski for one hour, Bob must take that time off of work, where he earns an hourly wage of $19. Additionally, there is a $8 entrance fee to the skiing facility. Which basic principle of individual choice do these statements best illustrate? O People usually exploit opportunities to make themselves better off. O The cost of something is what you give up to get it. O Markets are usually a good way to organize economic activity. O Trade can make everyone better off.
- 21. When you make a choice, whatever you give up as a consequence is called a/an a) priduction cost b) rationing method c) opportunity cost d) explicit cost13. A layperson says that a proposed government project simplycosts too much and therefore shouldn’t be undertaken.How might an economist’s evaluation be different?14. Economists say that individuals make decisions at themargin. What does this mean?15. How would an economist define the efficient amount oftime spent playing tennis?16. Ivan stops studying before the point at which his marginalbenefits of studying equal his marginal costs. Is IvanExplain what is meant by opportunity cost of choice
