Question 1

An airline ticket from Baltimore to Miami costs $525. A bus ticket is $325. Traveling by plane will take 5 hours, compared with 25 hours by bus. Thus, the plane costs $200 more but saves 20 hours of time (Hint: Note how we are "thinking at the margin" here by looking at the changes). Other things constant, an individual will gain by choosing air travel if, and only if, each hour of her time is valued at more than
A)$10 per hour.
B)$13 per hour.
C)$20 per hour.
D)$105 per hour.

Accepted Answer

The answer of An airline ticket from Baltimore to Miami...

Question 2

It can be said that, ultimately, consumers are the driving force in answering the three basic economic questions. Explain the consumer's role in providing these answers.

Accepted Answer

The answer of It can be said that, ultimately, consumers...

Question 3

Market economies are often criticized for how they answer the basic question, "For whom are goods produced?" This criticism usually comes from people who believe that the distribution of income is not "fair." Is there some way to separate production from distribution so that we can leave production just as it is but make the distribution of income "fairer"?

Accepted Answer

The answer of Market economies are often criticized for how...

Question 4

Jim values his car at $2,000, and Kelly values it at $5,000. Can value be created in this situation? How? Suppose Jim refuses to sell for less than $6,000. Is value destroyed? Why or why not?

Accepted Answer

The answer of Jim values his car at $2,000, and...

Question 5

The president of a large public university proclaims, "If we can get the state government to fund our new football stadium, it will not cost us anything." Evaluate this view from an economic perspective.

Accepted Answer

The answer of The president of a large public university...

Question 6

After the terrorist attacks on September 11, 2001, the United States began devoting substantial resources toward the War on Terrorism, homeland security, and relief efforts. Use the production possibilities curve to demonstrate how this might affect the production of other goods in the United States.

Accepted Answer

The answer of After the terrorist attacks on September 11,...

Question 7

A popular video program used to teach economics to primary school children defines opportunity cost as "what you give up to get something." In light of your understanding of opportunity cost, how would you modify this definition?

Accepted Answer

The answer of A popular video program used to teach...

Question 8

Middlemen, such as grocers, stockbrokers, and realtors
A)specialize in reducing transactions costs.
B)provide nothing of value to either the buyer or the seller.
C)have no effect on economic output in society.
D)do not exist in capitalist economies.

Accepted Answer

Middlemen specialize in reducing transaction costs by bringing buyers and sellers together and facilitating the exchange of goods or services. They provide value by offering product information, market analysis, and negotiation services to both parties, resulting in more efficient and effective trades. While some argue that middlemen may add extra costs to the transaction, their services are generally perceived as valuable and necessary in most market economies.

Question 9

Which of the following is NOT true of opportunity cost?
A)Opportunity costs are subjective because they depend upon how the decision-maker values his or her options.
B)Opportunity costs are only the monetary costs of lost options.
C)Opportunity costs are the highest-valued alternative sacrificed in order to choose an option.
D)Only the decision-maker can determine his or her opportunity costs for any particular action.

Accepted Answer

Opportunity costs are not limited to monetary costs, but also include the value of foregone alternatives that cannot be easily quantified in monetary terms, such as time or other opportunities.

Question 10

An economics professor points to a student in the front row and announces that "sitting in class is the thing you value most during this time period." Is the professor correct? Why or why not?

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The answer of An economics professor points to a student...

Question 11

Explain the idea of capital investment by using the story of Robinson Crusoe. What is sacrificed, and what is gained?

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Question 12

A department store buys a wool coat for $120 and sets its retail price at $300. The coat costs $85 to produce. When the coat doesn't sell, the store marks the price down to $200, then $100, and finally $70. At $70, Amy buys the coat. What was the coat's true value? Why?

Accepted Answer

The answer of A department store buys a wool coat...

Question 13

Mark and John are 10-year-old twins who do not get along. They have opened separate lemonade stands and are competing with each other, selling lemonade on their block. Their mother observes that Mark is very good at making lemonade and John is an excellent young salesman. She suggests they both could make more money if they worked together. John counters that two stands will always make more money than one. Who is right? Why?

Accepted Answer

The answer of Mark and John are 10-year-old twins who...

Quiz 2: B: Some Tools of the Economist