Straighterline Macroeconomics
The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell.
Why? - ANS Higher gas prices increased the cost of driving a SUV.
You want to buy a TV that regularly costs $250. You can either buy the TV from a nearby store
or from a store that's downtown. Relative to going to the nearby store, driving downtown
involves additional time and gas. The downtown store, however, has a 10% off sale this week.
Last week you drove downtown to save $20 on some concert tickets, a 15% savings. Should
you drive downtown to buy the TV? - ANS Yes, because you will save more than $20.
Matt has decided to purchase his textbooks for the semester. His options are to purchase the
books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the
books at the university bookstore at a cost of $170. Last week he drove to campus to buy a
concert ticket because they offered 25 percent off the regular price of $16. The benefit to Matt of
driving to campus to buy the concert ticket last week was: - ANS $4
Janie must choose to either mow the lawn or wash clothes. If she mows the lawn, she will earn
$30, and if she washes clothes, she will earn $45. She dislikes both tasks equally and they both
take the same amount of time. Janie will therefore choose to ______ because it generates a
______ economic surplus. - ANS wash clothes; bigger
Refer to the table below. The average cost of 4 units of this activity is:
0 $0 $0
1 $30 $100
2 $40 $160
3 $60 $190
4 $100 $210
5 $150 $220
6 $210 $225 - ANS $25
The cost-benefit model used by economists is: - ANS useful because most people follow it most
of the time.
The marginal benefit of an activity is the: - ANS extra benefit associated with an extra unit of
the activity.
Jack has a ticket to see Bo Bice for which he paid $30 yesterday. He takes an unpaid day off
from work to get ready for the concert. When he arrives at the concert, five different people offer
, him $70 for his ticket. Jack decides to keep his ticket. At the time he makes this decision, his
opportunity cost of seeing Bo Bice is: - ANS $70
The opportunity cost of an activity includes the value of: - ANS the next-best alternative that
must be foregone.
Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and
drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of
going to the beach is: - ANS the value she places on seeing the movie
You are trying to decide whether to purchase the latest Harry Potter book online or borrow it
from the library. There is no charge for borrowing a book from the library, but going to the library
takes more time than ordering a book online. Regardless of how you get the book, its benefit to
you is the same. If the cost of buying the book online is $13, then you should: - ANS borrow the
book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13.
Larry was accepted at three different graduate schools, and must choose one. Elite U costs
$50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at
$60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000
scholarship. Larry values attending State College at $40,000 per year. NoName U costs
$20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending
NoName at $15,000 per year. Larry's opportunity cost of attending Elite U is: - ANS $70,000
Dividing the total cost of n units of an activity by n reveals the: - ANS average cost
The table below shows how total donations, average donations, total labor costs and average
labor costs vary depending on the number of employees State U hires for its fundraising
activities.
The Chair of the Economics Department at State U says that fundraising employees should be
hired as long as their marginal benefit exceeds their marginal cost. If the University follows this
advice, then ______ employee(s) will hired, and the net benefit (total donations minus total labor
costs) will be ______. - ANS 2; $25,426
The following table shows the relationship between the speed of a computer's CPU and its
benefits and costs. Assume that all other features of the computer are the same (that is, CPU
speed is the only source of variation), and only the CPU speeds listed below are available for
purchase. - ANS $400
Economists use abstract models because: - ANS they are useful for describing general
patterns of behavior.
Suppose there are two parallel highways between two cities with approximately equal traffic.
What would you expect to happen if the state began charging tolls to drive on one of those
The last time gas prices increased drastically, sales of large Sport Utility Vehicles (SUVs) fell.
Why? - ANS Higher gas prices increased the cost of driving a SUV.
You want to buy a TV that regularly costs $250. You can either buy the TV from a nearby store
or from a store that's downtown. Relative to going to the nearby store, driving downtown
involves additional time and gas. The downtown store, however, has a 10% off sale this week.
Last week you drove downtown to save $20 on some concert tickets, a 15% savings. Should
you drive downtown to buy the TV? - ANS Yes, because you will save more than $20.
Matt has decided to purchase his textbooks for the semester. His options are to purchase the
books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the
books at the university bookstore at a cost of $170. Last week he drove to campus to buy a
concert ticket because they offered 25 percent off the regular price of $16. The benefit to Matt of
driving to campus to buy the concert ticket last week was: - ANS $4
Janie must choose to either mow the lawn or wash clothes. If she mows the lawn, she will earn
$30, and if she washes clothes, she will earn $45. She dislikes both tasks equally and they both
take the same amount of time. Janie will therefore choose to ______ because it generates a
______ economic surplus. - ANS wash clothes; bigger
Refer to the table below. The average cost of 4 units of this activity is:
0 $0 $0
1 $30 $100
2 $40 $160
3 $60 $190
4 $100 $210
5 $150 $220
6 $210 $225 - ANS $25
The cost-benefit model used by economists is: - ANS useful because most people follow it most
of the time.
The marginal benefit of an activity is the: - ANS extra benefit associated with an extra unit of
the activity.
Jack has a ticket to see Bo Bice for which he paid $30 yesterday. He takes an unpaid day off
from work to get ready for the concert. When he arrives at the concert, five different people offer
, him $70 for his ticket. Jack decides to keep his ticket. At the time he makes this decision, his
opportunity cost of seeing Bo Bice is: - ANS $70
The opportunity cost of an activity includes the value of: - ANS the next-best alternative that
must be foregone.
Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and
drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of
going to the beach is: - ANS the value she places on seeing the movie
You are trying to decide whether to purchase the latest Harry Potter book online or borrow it
from the library. There is no charge for borrowing a book from the library, but going to the library
takes more time than ordering a book online. Regardless of how you get the book, its benefit to
you is the same. If the cost of buying the book online is $13, then you should: - ANS borrow the
book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13.
Larry was accepted at three different graduate schools, and must choose one. Elite U costs
$50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at
$60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000
scholarship. Larry values attending State College at $40,000 per year. NoName U costs
$20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending
NoName at $15,000 per year. Larry's opportunity cost of attending Elite U is: - ANS $70,000
Dividing the total cost of n units of an activity by n reveals the: - ANS average cost
The table below shows how total donations, average donations, total labor costs and average
labor costs vary depending on the number of employees State U hires for its fundraising
activities.
The Chair of the Economics Department at State U says that fundraising employees should be
hired as long as their marginal benefit exceeds their marginal cost. If the University follows this
advice, then ______ employee(s) will hired, and the net benefit (total donations minus total labor
costs) will be ______. - ANS 2; $25,426
The following table shows the relationship between the speed of a computer's CPU and its
benefits and costs. Assume that all other features of the computer are the same (that is, CPU
speed is the only source of variation), and only the CPU speeds listed below are available for
purchase. - ANS $400
Economists use abstract models because: - ANS they are useful for describing general
patterns of behavior.
Suppose there are two parallel highways between two cities with approximately equal traffic.
What would you expect to happen if the state began charging tolls to drive on one of those
