ECO101H1 Lecture Notes - Opportunity Cost, Economic Surplus, Homo Economicus

21 views3 pages

chocolatewhale65

14 Apr 2014

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

elizabethkandelaki and 40134 others unlocked

ECO101H1 Full Course Notes

Verified Note

98 documents

Document Summary

If you are choosing between a and b, then the benefit to you of both a and b is relevant. If you have decided on a, its opportunity cost does not depend on the benefit you assign to a. Oc of a = cash outlay with a plus (benefit of b - cash outlay with b) Should not associate with benefit of a. Ontario receipt shows: 95 + 10 (tax) = 105. 1) does not imply that burden of tax (10) falls on buyers. 2) if there were no sales tax, price would be higher, at 100. 3)remember: the price to seller (95, if there is a tax) would be higher (100) if there were no tax. Receipt does not show the price the seller would have set. If dd is perfectly elastic , and there is a reduction in supply, consumer surplus will fall. False - if dd is perfectly elastic, consumer surplus is zero.

Related Questions

Suppose the demand and supply curves for eggs in the United
States are given by the following equations:

Qd = 100 - 20P
Q_s = 10 + 40P

where Qd = millions of dozens of eggs Americans would like to

buy each year; Qs = millions of dozens of eggs U.S. farms
would like to sell each year; and P = price per dozen of eggs.

Fill in the following table:

Price Quantity Quantity

( Per Dozen) Demanded (Qd) Supplied (Qs)

$ .50

$ 1.00

$ 1.50

$ 2.00

$ 2.50

2) Kamika lives in Chicago but goes to school in Tucson, Arizona.

For the last 2 years, she has made four trips home each year.
During 2010, the price of a round-trip ticket from Chicago to
Tucson increased from $350 to $600. As a result, Kamika
decided not to buy a new outfit that year and decided not to

, drive to Phoenix with friends for an expensive rock concert.

a. Explain how Kamika's demand for clothing and concert tickets can be affected by an increase in air travel prices.

b. By using this example, explain why both income and substitution effects might be expected to reduce Kamika s number
of trips home.

3) For each of the following products, explain whether demand is likely to be elastic or inelastic.

A) Cigarettes

B) Tacos

C) Gasoline

D) Milk

4 ) Explain which of the following is a fixed cost or a variable cost
for Southwest Airlines.

a. The cost of jet fuel used in its airplanes.

b. The monthly rent on its Dallas, Texas headquarters.

c. The yearly lease payments on its current inventory of
Boeing 737 jets.

d. The cost of peanuts it serves to passengers.

5) Which of the following indistries do you think are likely to exhibit large economies of scale? explain why in each case

a) Home building

b) Electric pwer generator

c) Vegetable farming

d) Software development

e) Aircraft manufacturing

salmoneel904

Suppose the demand and supply curves for eggs in the United
States are given by the following equations:

Qd = 100 - 20P
Q_s = 10 + 40P

where Qd = millions of dozens of eggs Americans would like to

buy each year; Qs = millions of dozens of eggs U.S. farms
would like to sell each year; and P = price per dozen of eggs.

Fill in the following table:

Price Quantity Quantity

( Per Dozen) Demanded (Qd) Supplied (Qs)

$ .50

$ 1.00

$ 1.50

$ 2.00

$ 2.50

2) Kamika lives in Chicago but goes to school in Tucson, Arizona.

, drive to Phoenix with friends for an expensive rock concert.

a. Explain how Kamika's demand for clothing and concert tickets can be affected by an increase in air travel prices.

b. By using this example, explain why both income and substitution effects might be expected to reduce Kamika s number
of trips home.

3) For each of the following products, explain whether demand is likely to be elastic or inelastic.

A) Cigarettes

B) Tacos

C) Gasoline

D) Milk

4 ) Explain which of the following is a fixed cost or a variable cost
for Southwest Airlines.

a. The cost of jet fuel used in its airplanes.

b. The monthly rent on its Dallas, Texas headquarters.

c. The yearly lease payments on its current inventory of
Boeing 737 jets.

d. The cost of peanuts it serves to passengers.

5) Which of the following indistries do you think are likely to exhibit large economies of scale? explain why in each case

a) Home building

b) Electric pwer generator

c) Vegetable farming

d) Software development

e) Aircraft manufacturing

maroondonkey410

Can you solve them and tell me if youre sure 100% 100% 100%

Question 1 (1 point)

If two variables move together but are otherwise unrelated, we have

Question 1 options:

a fallacy of composition.

an econometric model.

a spurious correlation.

an efficiency problem.

evidence of a weak correlation but strong causation.

Save

Question 2 (1 point)

The Latin expression "ceteris paribus": is essential in ______.

Question 2 options:

collecting data.

identifying sunk costs.

evaluating theories.

recognizing scarcity.

developing spurious relationships.

Save

Question 3 (1 point)

Opportunity cost is best defined as

Question 3 options:

marginal cost minus marginal benefit.

the time spent on an economic activity.

the value of the best forgone alternative.

the monetary cost of an economic decision.

marginal cost plus marginal benefit.

Save

Question 4 (1 point)

A cost that cannot be recovered at the time a decision is being made is termed a(n)

Question 4 options:

marginal cost.

scarcity cost.

sunk cost.

average cost.

opportunity cost.

Save

Question 5 (1 point)

If the marginal costs of 1, 2, and 3 hours of talking on the phone are $50, $75, and $105, then the total costs are

Question 5 options:

$50, $150, and $315.

$50, $41.67, and $115.

$50, 125, and $230.

$50, $175, and $405.

impossible to calculate with information given.

Save

Question 6 (1 point)

In general, individuals should specialize in producing those goods for which they

Question 6 options:

can produce more quickly than others.

can produce less quickly than others.

have the lowest opportunity cost compared to others.

have the highest opportunity cost compared to others.

have an average opportunity cost.

Save

Question 7 (1 point)

The extra benefit that comes from an extra unit of activity is called the _________ of the activity.

Question 7 options:

benefit

marginal benefit

marginal cost

average benefit

reservation benefit

Save

Question 8 (1 point)

The marginal benefit of an activity is the

Question 8 options:

same as the total benefits of the activity.

total benefit divided by the level of the activity.

change in the activity divided by the change in benefits.

extra benefit associated with an extra unit of the activity.

total benefit divided by the change in the level of the activity.

Save

Question 9 (1 point)

The fundamental problem that is studied in economics is that

Question 9 options:

consumers have limited wants in the face of unlimited resources.

markets should function without government interference.

Canada is too wealthy.

consumers have unlimited wants in the face of limited resources.

there are unlimited resources.

Save

Question 10 (1 point)

The range of topics, or issues, that fit within the definition of economics is

Question 10 options:

limited to market activities, e.g., buying soap.

limited to individuals and firms.

extremely wide, requiring only the ideas of choice and scarcity.

limited to governments and nations.

very limited.

Save

Question 11 (1 point)

When economists make predictions using the framework of a given economic model, it is usually based on

Question 11 options:

personal experiences.

important relationships between particular variables.

mathematical abstractions.

political implications.

the profit-maximizing objective.

Save

Question 12 (1 point)

The cost of spending an evening partying instead of studying economics is

Question 12 options:

the resulting decrease in the test score in Economics.

the time spent at the party.

the score of the test.

the cost of the textbook.

university tuition.

Save

Question 13 (1 point)

As one progresses from a one-person economy to a large, multi-person economy, the shape of production possibilities curve changes from

Question 13 options:

downward sloping to upwards sloping.

linear to convex (bowed into the origin).

concave (bowed out from the origin) to linear.

convex (bowed into the origin) to concave (bowed out from the origin).

linear to concave (bowed out from the origin).

Save

Question 14 (1 point)

Which is NOT a sunk cost?

Question 14 options:

Monthly rent of $1,000 contractually specified in a one-year lease.

An insurance premium of $50 per year, paid last month.

An attorney's retainer of $50,000 per year.

A worker's wage of $15 per hour.

A non-refundable deposit for a tender.

Save

Question 15 (1 point)

"We should support government intervention because the market produces undesirable outcomes" is an example of

Question 15 options:

positive economics.

normative economics.

comparative economics.

negative economics.

formative economics.

Save

amberchimpanzee966

ECO101H1 Lecture Notes - Opportunity Cost, Economic Surplus, Homo Economicus

ECO101H1 Full Course Notes

Document Summary

Get access

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related Documents

ECO101H1 Lecture 8: Lecture 8-Supply, Demand and Government Policy

ECO101H1 Lecture Notes - Sales Tax, Demand Curve, Canada Pension Plan

ECO101H1 Lecture Notes - Lecture 5: Asteroid Family, Economic Surplus, Demand Curve

Related Questions