Eco 202 exam review 2024
Which of the following would be considered macroeconomics?
A) A study of how the introduction of smartphones will affect streaming platforms
B) A study of how increasing the cigarette tax will affect smoking rates
C) A study of how a tax cut on computer chips will af...
Which of the following would be considered macroeconomics?
A) A study of how the introduction of smartphones will affect streaming platforms
B) A study of how increasing the cigarette tax will affect smoking rates
C) A study of how a tax cut on computer chips will affect the price of computer
chips
D) A study of how an increase in income taxes will affect the unemployment rate
** Answ** Answer: D
You participate in a survey on campus and win your choice of three concert
tickets: Post Malone, Taylor Swift, or Bad Bunny. You choose Taylor Swift
because she is your favorite performer. Your second choice would have been Bad
Bunny. What is the opportunity cost of the concert tickets?
A) Zero, because they are free
B) The Bad Bunny tickets and the Post Malone ticket
C) The Post Malone ticket
D) The Bad Bunny ticket ** Answ** Answer: D
The next best alternative is the Bad Bunny ticket which means that it is the
opportunity cost.
Opportunity Cost ** Answ** the most desirable alternative given up as the
result of a decision
Sheldon works as a researcher in a university. Sheldon also likes hanging out with
his friendsand roommates. Then, Sheldon adopts a cat. He likes his cat a lot; he has
higher benefit fromspending time with his cat than his best alternative before.
Based on what we've learned inclass, when Sheldon gets the new cat, his
opportunity cost working for the university has_________. We expect him to
spend _______ hours working.
A) increased; more
B) increased; fewer
,C) decreased; more
D) decreased; fewer ** Answ** Answer: B
Because of his cat, Sheldon's best alternative has higher value now. So his
opportunity cost increases. He works fewer hours.
You are binge watching the show Wednesday on Netflix and have one episode left
in the season. Which of the following would describe the marginal benefit of
watching that last episode?
A) The enjoyment you get from watching the last episode
B) The total enjoyment you received from the first season
C) The hour that you could have spent on your best possible alternative use of the
time
D) The monthly subscription fee for Netflix ** Answ** Answer: A
Marginal decision making means focusing on the small decisions. The marginal
utility of watching another episode is the enjoyment you get from watching it.
Marginal Benefit ** Answ** the additional benefit to a consumer from
consuming one more unit of a good or service
Marginal cost ** Answ** Extra cost of producing one additional unit of
production.
Howard visits Buffalo Wild Wings. He pays $5 and eats 5 chicken wings. His
benefit fromthe first 5 wings is $6 each. His marginal benefit for the 6 th wing is
still $6. He buys a plateof 5 more wings. After eating two more chicken wings,
Howard realizes he will only get $0.5worth of enjoyment out of each of the last 3
wings. That is, his benefit for the remaining 3wings is $0.5 each. What should
Howard do?
A) Not eat any of the wings
B) Eat one of the wings
C) Eat two of the wings
D) Eat all three of the wings ** Answ** Answer: D
, His marginal cost of the three wings is $0. He's paying $5 for the 6th wing and
paying $0 for the 7th-10th wings. So the marginal cost of getting the 6th wing is $5
but $0 for the next four wings. This is like he's buying the 6th wing for $5 and
getting four wings for free. He will eat the wings because the marginal benefit is
greater than or equal to his marginal cost. ($0.5>$0)
Leonard also visits Buffalo Wild Wings on a Tuesday with Howard. He pays $10
and eats 10chicken wings. His benefit from the first 5 wings is $10 each and his
benefit for the last 5wings is $8 each. His marginal benefit for the 11th wing is still
$8. He buys a plate of 5 more wings. After eating two more chicken wings,
Leonard realizes he will only get $0.5 worth of enjoyment out of remaining first
wing and his benefit for the last 2 wings is less than $0.That is, his benefit for the
first wing is $0.5 but negative for the last two wings. What should Leonard do?
A) Not eat any of the wings
B) Eat one of the wings
C) Eat two of the wings
D) Eat all three of the wings ** Answ** Answer: B
Raj also visits Buffalo Wild Wings on a Tuesday with Howard and Leonard. Raj
pays $10and eats 10 chicken wings. His benefit from the first 10 wings is $8 each.
His marginal benefit for the 11th wing is still $8. After seeing Howard and
Leonard, he recalls from EC202 and tries to determine if he should buy another set
of chicken wings. However, Raj only knows his marginal benefit for the 11th but
he is unable to determine what his marginal benefit for the remaining chicken
wings would be. What would Raj do?
A) Purchase a set of 5 chicken wings
B) Leave the restaurant
C) Insufficient information ** Answ** Answer: C
Since the wings are sold in a set of five, Raj does not know his marginal benefit for
the other four wings.
Penny is deciding how big of a house to build. She gets decreasing marginal
benefitfrom house size (so, the marginal benefit of the first square foot is greater
than themarginal benefit of the second square foot and so on). The builder charges
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