Question 1

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour.
 
-Refer to the scenario above.The total cost per month is the lowest if Ryan chooses to rent Apartment ________.
A) 1
B) 2
C) 3
D) 4

Accepted Answer

To find the lowest total cost per month, we need to consider both the monthly rent and the opportunity cost of the time that Ryan spends on his daily commute to work.

Apartment 1: Rent = $800, Commute time = 20 hours (Total cost = $800 + $300 = $1,100)
Apartment 2: Rent = $850, Commute time = 15 hours (Total cost = $850 + $225 = $1,075)
Apartment 3: Rent = $750, Commute time = 25 hours (Total cost = $750 + $375 = $1,125)
Apartment 4: Rent = $950, Commute time = 5 hours (Total cost = $950 + $75 = $1,025)
Apartment 5: Rent = $900, Commute time = 10 hours (Total cost = $900 + $150 = $1,050)

Based on the above calculations, Apartment 2 has the lowest total cost per month at $1,075. Therefore, the best choice for Ryan would be Apartment 2.

Question 2

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour.
 
-Refer to the scenario above.What is the opportunity cost of the commute to work per month if Ryan rents Apartment 2?
A) $20
B) $150
C) $200
D) $300

Accepted Answer

The answer of Scenario: Ryan wants to rent an apartment....

Question 3

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days.
-Refer to the scenario above.Which of the following statements is true?
A) Both optimization techniques will provide an efficient outcome, but optimization using total value will be faster to implement.
B) Both optimization techniques will provide an efficient outcome, but optimization using marginal analysis will be faster to implement.
C) Only optimization using marginal analysis can be used to arrive at an optimum choice. Optimization using total value will not be applicable in this case.
D) Only optimization using total value can be used to arrive at an optimum choice. Optimization using marginal analysis will not be applicable in this case.

Accepted Answer

The answer of Scenario: Sarah has to choose between renting...

Question 4

-Refer to the table above.If the opportunity cost of time increases to $60 per hour,renting which apartment will turn out to be the most expensive every month?
A) 1
B) 2
C) 3
D) 4

Accepted Answer

The answer of 
-Refer to the table above.If the opportunity...

Question 5

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days.
-Refer to the scenario above.If Sarah is optimizing using marginal analysis,then which of the following statements is true?
A) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the cost of staying for the third day.
B) She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the benefits of staying for the first 2 days.
C) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days.
D) She will rent the hotel room for 3 days if the cost of staying for the first 2 days is less than the cost of staying for the third day.

Accepted Answer

Marginal analysis involves comparing the additional benefits of an action to its additional costs. If the benefit of staying an extra day (the third day) exceeds the cost of that day, it makes sense for Sarah to extend her stay, according to marginal analysis principles.

Question 6

The analysis of how a customer's taste for cars will change when her wealth triples falls under the scope of ________.
A) normative analysis
B) marginal research
C) cost-benefit analysis
D) before and after comparisons

Accepted Answer

The answer of The analysis of how a customer's taste...

Question 7

Which of the following statements is true?
A) Marginal analysis is a key tool used while optimizing using total value.
B) Before and after comparisons can be used in both optimization using total value and optimization using marginal analysis.
C) Marginal analysis is the comparison of economic outcomes before and after some economic variable is changed.
D) Before and after comparisons involve calculating the incremental cost of moving from one alternative to the next best alternative.

Accepted Answer

Before and after comparisons are indeed a method that can be applied in both optimization using total value and optimization using marginal analysis, allowing for the evaluation of changes or differences in scenarios or outcomes under both approaches.

Question 8

The analysis of economic outcomes before and after some economic variable is changed is referred to as ________.
A) normative economics
B) marginal study
C) empiricism
D) before and after comparisons

Accepted Answer

The analysis of economic outcomes before and after some economic variable is changed is referred to as before and after comparisons. Normative economics involves value judgments and recommendations for action, while marginal study involves analyzing the effects of small changes in variables. Empiricism involves using data and observations to test hypotheses.

Question 9

An individual decides to rent an apartment for $7,000 per month.The commuting time from this apartment to her office is 80 hours per month.If the individual's opportunity cost of time is $30 per hour,calculate the direct cost,indirect cost,and total cost she would incur per month if she rents the apartment.

Accepted Answer

The answer of An individual decides to rent an apartment...

Question 10

The following figure shows an individual's total cost of renting four apartments located at different distances from her place of work.
 
-Refer to the figure above.Which apartment is the best feasible choice for the individual?
A) Apartment 1
B) Apartment 2
C) Apartment 3
D) Apartment 4

Accepted Answer

The answer of The following figure shows an individual's total...

Question 11

Refer to the table below.Given that an individual's opportunity cost of time is $30 per hour,which of the two apartments should she rent?

Accepted Answer

The answer of Refer to the table below.Given that an...

Question 12

Assume that an individual has to decide between a 2-day vacation and a 3-day vacation to the same place.If he uses optimization using marginal analysis,he will ________.
A) only think about the net benefits of the extra day
B) compare the total net benefits of both alternatives
C) choose the 3-day vacation only if the costs incurred on the third day exceed the benefits he receives
D) spend more time to make a decision than he would had he used optimization using total value

Accepted Answer

Optimization using marginal analysis involves comparing the additional benefits and costs of one more unit of something. In this case, the individual will consider the net benefits (benefits minus costs) of the extra day to decide whether the 3-day vacation is worth it compared to the 2-day vacation.

Question 13

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour.
 
-Refer to the scenario above.If the opportunity cost of time increases to $60 per hour,renting which apartment will minimize Ryan's total cost every month?
A) 2
B) 3
C) 4
D) 5

Accepted Answer

When the opportunity cost of time increases to $60 per hour, the cost of commuting increases as well. Therefore, it makes more sense for Ryan to choose the apartment that is closest to his job, apartment 5, even though it has the highest rent of $1200 per month. The total cost for renting apartment 5 would be $1365 per month ($1200 for rent + 45 hours of commuting at $30 per hour), which is the lowest among all options.

Question 14

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days.
-Refer to the scenario above.Which of the following is true if Sarah is optimizing using total value?
A) She will rent the hotel room for 3 days if the net benefit of staying for the third day is negative.
B) She will rent the hotel room for 3 days if the cost of staying for 2 days exceeds the cost of staying for 3 days.
C) She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days.
D) She will rent the hotel room for 3 days if the total benefit of staying for 3 days exceeds the total benefits of staying for 2 days.

Accepted Answer

Sarah is optimizing using total value, which means she will choose the option that gives her the greatest overall benefit. This benefit includes both costs and benefits. If the net benefit (benefit minus cost) of staying for three days is greater than the net benefit of staying for two days, then Sarah will choose to rent the hotel room for three days. Therefore, option C is true. Option A is not necessarily true as a negative net benefit for the third day does not necessarily mean that the net benefit for the second day is greater. Option B is not necessarily true as the comparison between costs does not take into account the benefits of staying for an additional day. Option D is not necessarily true as the total benefits could include costs, and Sarah may choose the option with the greatest net benefit rather than the greatest total benefits.

Question 15

Assume that an individual with an opportunity cost of time of $20 per hour has to choose between renting four apartments.The rents of the four apartments and the individual's monthly commuting time to work are shown in the following table.Calculate the direct cost,indirect cost,and total cost that the individual will incur if she rents any of these apartments.Also,determine the apartment that is optimum for the individual.Graph the total cost involved for the various choices.

Accepted Answer

The answer of Assume that an individual with an opportunity...

Question 16

The following figure shows an individual's total cost of renting four apartments located at different distances from her place of work.
 
-Refer to the figure above.Other things remaining the same,assume that the individual now has a higher opportunity cost of time.Which of the following statements is true in this context?
A) The cost curve will move up.
B) The cost curve will move down.
C) Optimization using total value will not lead to an efficient outcome.
D) Optimization using marginal analysis will not lead to an efficient outcome.

Accepted Answer

A higher opportunity cost of time implies that the individual values her time more and is willing to pay more to save time. This means that her total cost of renting apartments will increase, resulting in an upward shift of the cost curve. Therefore, the best choice is A.

Question 17

Assume that a firm wants to set up a factory.It considers four different locations.The rent of the factory space and the time taken to transport the products from each of the locations to the market is shown in the table below.It is also given that the opportunity cost of time is $10 per hour.
a)Which is the optimum location?
b)If the opportunity cost of time changes to $30 per hour,is there any change in the optimum?

Accepted Answer

The answer of Assume that a firm wants to set...

Question 18

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour.
 
-Refer to the scenario above.The total cost per month is the highest if Apartment ________ is rented.
A) 2
B) 3
C) 4
D) 5

Accepted Answer

To determine the total cost per month, we need to add the rent and the opportunity cost of time spent commuting to work. We multiply the number of hours spent commuting by Ryan's opportunity cost of time, which is $15.

For Apartment 1: 
Total cost = $900 + (30 hours/month x $15/hour) = $1,350

For Apartment 2: 
Total cost = $1,000 + (20 hours/month x $15/hour) = $1,300

For Apartment 3: 
Total cost = $1,100 + (10 hours/month x $15/hour) = $1,250

For Apartment 4: 
Total cost = $1,200 + (5 hours/month x $15/hour) = $1,275

For Apartment 5: 
Total cost = $1,500 + (35 hours/month x $15/hour) = $2,025

Therefore, the total cost per month is highest for Apartment 5, which costs $2,025 per month. The best choice for Ryan would be Apartment 3, which has the lowest total cost of $1,250 per month.

Question 19

An individual rents an apartment for $200 per month.His monthly opportunity cost of commuting to work from this apartment is $50.After a year,he moves to an apartment closer to his place of work,but pays a rent of $250.Compared to the initial situation,after a year,his direct cost of renting the apartment ________.
A) increases, while the indirect cost of renting the apartment remains unchanged
B) increases, while the indirect cost of renting the apartment decreases
C) remains the same, while the indirect cost of renting the apartment decreases
D) remains the same, while the indirect cost of renting the apartment increases

Accepted Answer

The individual's direct cost of renting the apartment increases from $200 to $250 per month, so there is an increase of $50 in direct cost. However, the opportunity cost of commuting to work decreases from $50 per month to $0, since the new apartment is closer to his place of work. Therefore, the indirect cost of renting the apartment decreases by $50 per month. Overall, the individual experiences an increase in direct cost and a decrease in indirect cost, so the best answer is B.

Question 20

Which of the following is an example of before and after comparisons?
A) The estimation of the quantity demanded of a good when its price is $5
B) The estimation of the demand for a particular good when consumer income is $10
C) The estimation of the ideal number of workers a firm should hire when wage rate is $20 per hour
D) The estimation of the supply of a good when the wage rate of labor changes from $30 to $10 per hour

Accepted Answer

Option D involves estimating the supply of a good before and after a change in the wage rate of labor, which is a before-and-after comparison. The other options do not involve before-and-after comparisons.

Quiz 3: Optimization: Doing the Best You Can

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. -Refer to the scenario above.Which of the following statements is true?

-Refer to the table above.If the opportunity cost of time increases to $60 per hour,renting which apartment will turn out to be the most expensive every month?

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. -Refer to the scenario above.If Sarah is optimizing using marginal analysis,then which of the following statements is true?

The analysis of how a customer's taste for cars will change when her wealth triples falls under the scope of ________.

Which of the following statements is true?

The analysis of economic outcomes before and after some economic variable is changed is referred to as ________.

The following figure shows an individual's total cost of renting four apartments located at different distances from her place of work. -Refer to the figure above.Which apartment is the best feasible choice for the individual?

Refer to the table below.Given that an individual's opportunity cost of time is $30 per hour,which of the two apartments should she rent?

Assume that an individual has to decide between a 2-day vacation and a 3-day vacation to the same place.If he uses optimization using marginal analysis,he will ________.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. -Refer to the scenario above.Which of the following is true if Sarah is optimizing using total value?

Which of the following is an example of before and after comparisons?