Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Chapter 5, Problem 3TY
Emily buys an air conditioner that costs $700. Because the air in her home is cleaner, its use saves her $250 in curtain cleaning costs over the lifetime of the air conditioner. In money terms, what is the
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Anderson is facing the hardest decision in his life: Should he buy the newest Xbox Series X (cost $500), the newest Apple Airpod Max (cost $550), or the newest Apple Mac Pro Wheels Kit (cost $700). Right now, Anderson has exactly $700. Provided that Anderson already has EVERYTHING he needs and the $700 cannot be used on anything else to make him happier (in other words, the $700 should only be spent on these 3 items. Moreover, for example, if Anderson chooses to buy the Xbox for $500, the remaining $200 is not usable and has no value to Anderson). 1/ If Anderson chooses to buy the Airpod Max, what is the opportunity cost associated with that option? 2/ How would your answer in 1/ change if Anderson just won the $1 million lotteries today? 3/ How would your answer in 1/ change if Anderson just lost one of his $100 bill today, making him now only has $600 left?
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- Marie has a weekly budget of $24. Pie's are $12. Magazine's are $4. What is the maximum number of pies Marie can buy in a week? What is the maximum number of magazines Marie can buy in a week?arrow_forwardKamryn is deciding between three potential activities on Saturday evening: 1) Staying at home and watching her favorite television show, an activity that she values at $18 and that entails no out-of- pocket costs. 2) Going to the movies with her sister to see the latest blockbuster action film, an activity she values at $30 and that entails $15 in out-of-pocket costs. 3) Going out to dinner with her best friend, an activity she values at $40 and that entails $23 in out-of-pocket costs. a. Which activity should Kamryn choose? b. What is Kamryn's opportunity cost of going to the movies? Instructions: If you are entering a negative number, be sure to include a negative sign (-). $ Staying at home and watching her favorite show O Going out to dinner with her best friend Going to the movies with her sister $ c. Relative to her next best alternative, what is Kamryn's economic surplus from going to the movies? Instructions: If you are entering a negative number, be sure to include a negative…arrow_forwardUse the following information to answer questions 1 through 8: A student has a monthly budget of $120 to spend on either burritos, which cost $6 each, or sodas, which cost $4 each. What is the largest number of burritos that the student could afford to purchase in one month? What is the largest number of sodas the student could afford to purchase in one month?arrow_forward
- my choice is incorrectarrow_forwardYou have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your opportunity cost of seeing a movie this afternoon? Select one: O a. $57 O b. $12 ○ c. $22 ○ d. $8arrow_forwardthe options to choose from are shownarrow_forward
- A consumer has a choice of spending $20,000 on a Honda or $14,000 on a Kia. She was observed buying a Kia during the weekend. Does this mean the consumer prefers the Kia to the Honda? Explain your answerarrow_forwardwhat are Methods for increasing marginal utility more accurate or efficient?arrow_forwardPotatoes cost Janice $0.50 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. Suppose she feels that the first pound of potatoes is worth $1.50, the second pound is worth $1.14, the third pound is worth $1.05, and all subsequent pounds are worth $0.30 per pound. Instructions: Enter your answers as a whole number. a. How many pounds of potatoes will she purchase? pound(s) of potatoes b. How many pounds will she purchase if she has only had $2.00 to spend? pound(s) of potatoesarrow_forward
- Ahmed is considering his plans for the coming weekend. He is currently working as a marketing specialist in a big advertising company. He normally spends the weekend with family but this weekend he is thinking of going on a camping trip that would cost him about $1,900. At the same time, his manager asked him whether he can help during the weekend and the company will be willing to pay him an overtime bonus of $1,000. If Ahmed goes on the camping trip, he can manage to provide a number of quick consultancy services that would earn him around $2,500. If Ahmed decided to go on the camping trip what would be the incremental cost of that decision ($)? a. None of the given answerS O b. 1,000 O c. 2,500 O d. 1,900 O e. 600arrow_forwardAt the start of the week, Marie decides to buy a pie. Does this imply that the utility she receives from this pie is greater than or less than her opportunity cost of purchasing the pie? Marie is thinking about purchasing a second pie. Do we expect the marginal utility she receives from the second pie to be greater than, less than, or equal to the marginal utility she receives from the first pie? Explain your answer.arrow_forwardThe marginal benefit Claire gets from purchasing a third pair of flip-flops is a) the same as the total benefit of purchasing three pairs of flip-flops. b) more than the marginal cost of purchasing the third pair of flip-flops. c) the total benefit Claire gets from purchasing three pairs of flip-flops minus the total benefit she gets from purchasing two pairs of flip-flops. d) the total benefit Claire gets from purchasing four pairs of flip-flops minus the total benefit she gets from purchasing three pairs of flip-flops.arrow_forward
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