Chapter 1 Homework Exam UPDATED
QUESTIONS AND CORRECT ANSWERS
1. Understanding Opportunity Cost
Before you started applying for college, a job recruiter offered you a full-time cashier
position at a doctor's office, earning an after-tax salary of $28,000 per year. However, you
turn down this offer and attend your first year of college. The additional monetary cost of
college to you, including tuition, supplies, and additional housing expenses, is $35,000.
You decide to go to college, probably because... - CORRECT ANSWER You value a
year of college at more than $63,000.
2. Determining opportunity cost
Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three
stores carry the same suit, but it is more convenient for Juanita to get to some stores than
others. For example, she can go to her local store, located 15 minutes away from where she
works, and pay a marked-up price of $114 for the suit:
Assume that Juanita takes opportunity costs and the price of the suit into consideration when
she shops. Juanita will minimize the cost of the suit if she buys it from the
Store: OC Price Total
Dept: 30 114 144
Across: 45 86 131
Neighbor: 75 60 135 - CORRECT ANSWER Store across town.
3. Equality versus efficiency
Match each definition to its appropriate concept.
1. When economic benefits are distributed uniformly across society.
, 2. When a society gets the most it can from its scarce resources.
If the United States government lowers the income taxes on the wealthiest Americans, while
decreasing welfare payments to the poorest Americans, the result will likely be
______________ in efficiency and _________ in equality in the United States. - CORRECT
ANSWER 1. Equality
2. Efficiency
An increase, a decrease
4. A decision at the margin
Jake is a hard-working college sophomore. One Saturday, he decides to work nonstop until he
has answered 100 practice problems for his math course. He starts work at 8:00 AM and uses
a table to keep track of his progress throughout the day. He notices that as he gets tired, it
takes him longer to solve each problem.
Time: Total Answered:
8:00 0
9:00 40
10:00 70
11:00 90
Noon 100
The marginal, or additional, gain from Jake's first hour of work, from 8:00 AM to 9:00 AM, is
______ problems.
The marginal gain from Jake's third hour of work, from 10:00 AM to 11:00 AM, is _____
problems.
Later, the teaching assistant in Jake's math course gives him some advice. "Based on past
experience," the teaching assistant says, "working on 15 problems raises a student's exam
QUESTIONS AND CORRECT ANSWERS
1. Understanding Opportunity Cost
Before you started applying for college, a job recruiter offered you a full-time cashier
position at a doctor's office, earning an after-tax salary of $28,000 per year. However, you
turn down this offer and attend your first year of college. The additional monetary cost of
college to you, including tuition, supplies, and additional housing expenses, is $35,000.
You decide to go to college, probably because... - CORRECT ANSWER You value a
year of college at more than $63,000.
2. Determining opportunity cost
Juanita is deciding whether to buy a suit that she wants, as well as where to buy it. Three
stores carry the same suit, but it is more convenient for Juanita to get to some stores than
others. For example, she can go to her local store, located 15 minutes away from where she
works, and pay a marked-up price of $114 for the suit:
Assume that Juanita takes opportunity costs and the price of the suit into consideration when
she shops. Juanita will minimize the cost of the suit if she buys it from the
Store: OC Price Total
Dept: 30 114 144
Across: 45 86 131
Neighbor: 75 60 135 - CORRECT ANSWER Store across town.
3. Equality versus efficiency
Match each definition to its appropriate concept.
1. When economic benefits are distributed uniformly across society.
, 2. When a society gets the most it can from its scarce resources.
If the United States government lowers the income taxes on the wealthiest Americans, while
decreasing welfare payments to the poorest Americans, the result will likely be
______________ in efficiency and _________ in equality in the United States. - CORRECT
ANSWER 1. Equality
2. Efficiency
An increase, a decrease
4. A decision at the margin
Jake is a hard-working college sophomore. One Saturday, he decides to work nonstop until he
has answered 100 practice problems for his math course. He starts work at 8:00 AM and uses
a table to keep track of his progress throughout the day. He notices that as he gets tired, it
takes him longer to solve each problem.
Time: Total Answered:
8:00 0
9:00 40
10:00 70
11:00 90
Noon 100
The marginal, or additional, gain from Jake's first hour of work, from 8:00 AM to 9:00 AM, is
______ problems.
The marginal gain from Jake's third hour of work, from 10:00 AM to 11:00 AM, is _____
problems.
Later, the teaching assistant in Jake's math course gives him some advice. "Based on past
experience," the teaching assistant says, "working on 15 problems raises a student's exam
