ch 2. some tools of the economists: aplia homework – Flashcards

Juanita makes $18 an hour at work. She has to take time off work to purchase her suit, so each hour away from work costs her $18 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.

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

You work as an assistant coach on the university swim team and earn $12 per hour. One day, you decide to skip the hour-long practice and, instead, go to the local carnival, which has an admission fee of $10. The total cost (valued in dollars) of skipping practice and going to the carnival (including the opportunity cost of time) is

Eleanor needs a new roof. She finds Kevin, a roofing contractor, through an ad he posted in the local newspaper. Kevin paid $70 to post the ad in the newspaper. After Eleanor and Kevin agree on the price for the new roof, they sign a contract, which Eleanor has a law firm write up for $115, stating that Kevin will install Eleanor's new roof for $2,400. The transaction costs associated with this exchange are

Many underdeveloped economies have a large number of squatters—people who occupy a plot of land without any deed existing to give anyone formal ownership. Therefore, they use the land and its resources, but they do not officially own the land. How might the lack of well-defined property rights hold back economic growth? Check all that apply.

Suppose the Netherlands produces only two goods: corn and DVDs. The following graph shows the Netherlands's current production possibilities frontier (also known as the production possibilities curve), along with six output combinations represented by black points (plus symbols) labeled A to F. Complete the following table by indicating whether each point represents output combinations that are inefficient, efficient, feasible, or infeasible. Check all that apply.

Suppose Sam is currently using combination D, producing one boat per day. His opportunity cost of producing a second boat per day is ____ per day.

Now, suppose Sam is currently using combination C, producing two boats per day. His opportunity cost of producing a third boat per day is _____ per day.

From the previous analysis, you can determine that as Sam increases his production of boats, his opportunity cost of producing one more boat _____

Because he can now make more boats per hour, Sam's opportunity cost of producing kites is _____ it was previously.

Suppose South Africa produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier (also known as the production possibilities curve) for barley, an agricultural good, and industrial robots, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a long drought that reduces the amount of water available for farmers to use for irrigation. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.

When entrepreneurs bring a new product to market or use a new production method, they are _____

Mitch, the president of a company that makes electronic devices, borrows a large sum of money from the local bank to purchase the machinery needed to produce a line of HDTVs. HDTV technology is expected to eventually make regular TVs obsolete. As depicted in the above scenario, which of the following is an example of creative destruction?

The following graph shows the production possibilities curve (also known as the production possibilities frontier) of an economy that produces cars and computers. Suppose that a rise in this economy's saving rate allows for investment in modern, efficient manufacturing plants. Adjust the production possibilities curve (PPC) to show the economy's new production possibilities after the rise in the saving rate. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther.

Suppose society faces a broad tradeoff between allocating resources to the production of investment goods (computers) and consumption goods (cars) before the rise in the saving rate described above. Which of the following events would be most likely to lead to the rise in the saving rate you just illustrated?

Jared and Latasha are partners at a management consulting firm. They are trying to determine which of them has a comparative advantage in creating the 50 slides required for a sales pitch to a prospective client. Jared can create 15 slides per hour. For other activities, he can bill clients $750 per hour. Jared's opportunity cost of creating slides is ____ per slide.

Latasha's opportunity cost of creating slides is 30% lower than Jared's. However, as the senior partner, her billing rate is 25% higher. Based on all of these facts, _____ has a comparative advantage in creating slides.

One of the three basic questions an economy has to face is _____ goods and services will be produced.

True or False: Under market organization, individuals can communicate their preferences to other decision makers directly, through communication, but not indirectly, through their choice of whom to transact with.

Candonia has a comparative advantage in the production of _____ , while Desonia has a comparative advantage in the production of _______ . Suppose that Candonia and Desonia specialize in the production of the goods in which each has a comparative advantage. After specialization, the two countries can produce a total of ______ million pounds of potatoes and ____ million pounds of tea.