Assume that you are a rational person and that you visit a grocery store to buy bananas. Use the marginal benefit and marginal cost (utils) principle, described in Unit 1, to explain how many bananas you will ultimately buy.
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Assume that you are a rational person and that you visit a grocery store to buy bananas. Use the marginal benefit and
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- 1. Working with Numbers and Graphs Q1 Suppose the marginal costs of reading are constant at $14 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) 10 16 40 4. Assume the marginal-benefit curve is a straight line through the two points described in the table. 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). MARGINAL COST, MARGINAL BENEFIT (S per hour of reading per week) 10 12 14 20 10 At any level of reading below the…Topic One: Substitutes and Complements 1. How do retail stores display their merchandise taking into account substitute or complementary goods? Give some examples. 2. Have your purchases been influenced by these marketing techniques? Give some examples. Topic Two: Measuring Opportunity Cost How would you suggest to measure the opportunity cost of a parent that chooses to play with their child vice play sudoku? How would you measure the opportunity cost of the kid? Topic Three: Marginal Analysis, Opportunity Cost We read this week that opportunity cost must be used to make rational decisions, we also read that people should make decisions after considering marginal benefit versus marginal cost. Could you think in situations that you could use opportunity cost, marginal benefit and marginal cost concepts to make your own decisions? Provide examples.The table below describes the total and marginal benefit Elvis gets from eating fried peanut butter and banana sandwiches. Elvis' Benefits of Fried Peanut Butter and Banana Sandwiches Fried PBB Total Marginal Benefit (dollars) Benefit (dollars) Sandwiches 1 2 3 4 5 42 66 75 81 78 42 24 -3 4 Instructions: Enter your answer as a whole number. What is the marginal benefit of the 4th fried peanut butter and banana sandwich?
- 1. Your health club offers you "free" parking and unlimited use of its facilities seven days a week if you buy an annual membership for $3,650, to be paid at the time the membership is taken out. Otherwise, you buy daily passes for $10 per day for the use of the facilities, plus pay for your parking. Is your parking truly "free" if you buy the annual membership? Explain.Suppose you have a budget of $12 and cost of a cola is $2 and sandwich is $4. Using this information form the table, how many sandwiches and cola would you buy at the optimum?2. Determining opportunity cost Juanita is deciding whether to buy a skirt that she wants, as well as where to buy it. Three stores carry the same skirt, but it is more convenient for Juanita to get to some stores than others. For example, she can go to her local store, Discounted price located 15 minutes away from where she works, and pay a Marked-up price marked-up price of $122 for the skirt: Juanita's office Original price Travel Time Each Way Price of a Skirt Store (Minutes) (Dollars per skirt) Local Department Store 15 122 Across Town 30 90 Neighboring City 60 78 Juanita makes $60 an hour at work. She has to take time off work to purchase her skirt, so each hour away from work costs her $60 in lost income. Assume that returning to work takes Juanita the same amount of time as getting to a store and that it takes her 30 minutes to shop. As you answer the following questions, ignore the cost of gasoline and depreciation of her car when traveling. Complete the following table by…
- 12. Suppose a cup of coffee at the campus coffee shop is $2.00 and a cup of hot tea is $2.50. Suppose a student's beverage budget is $20 per week. What is the most cups of tea the student could buy? a. b. 10 16 d. 20 c.6. Scarcity, opportunity cost, and marginal analysis Cho 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, Cho must take time away from work, where she earns $10 per hour. This is in addition to paying a $4 entrance fee for the pool. Which basic principle of individual choice do these statements best illustrate? A-The cost of something is what you give up to get it. B-People usually exploit opportunities to make themselves better off. C-Trade can make everyone better off. D-Markets are usually a good way to organize economic activity.3 2. A decision at the margin Jake is a hard-working college sophomore. One Tuesday, he decides to work nonstop until he has answered 110 practice problems for his economics 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 Problems Answered 8:00 AM 0 9:00 AM 50 10:00 AM 80 11:00 AM 100 Noon 110 Use the table to answer the following questions. 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 for Jake’s economics course gives him some advice. “Based on past experience,” the teaching assistant says, “working on 25 problems raises a student’s exam score by about the same amount as reading the textbook for 1 hour.” For…
- Use 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?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?Marginal Analysis 5. Suppose you choose to eat 3 slices of pizza for dinner. An economist who is using marginal thinking to analyze your decision would be most interested in the answer to which of the following questions? A) Why did you eat 3 slices of pizza instead of 4 B) Why did you eat more than 1 slice of pizza? C) Why didn't you eat 5 slices of pizza? D) Why did you have pizza instead of a salad? 6. The additional benefits you would get if you had taken 1 more credit this semester is the: A total beneit of college credits B) marginal cest of a college credit total cost of college credits D) marginal benefit of a college credit/ 7. Which of these gives the best definition of "the margin" as economists use the term? A The value of the next best choice that you give up when you make a decision E The limit to an individual's ability to do complex mathematical calculations C) The dividing line between an action that is taken and an action that is not taker ) The difference between the…
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