Economics 0011A/B Lecture Notes - Lecture 1: Jidenna, Financial Plan, Lizzo

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Published on 2 Aug 2020
Department
Professor
ECO 101H1: Principles of Microeconomics Prof. Freitas, University of Toronto
Problem Set 1: Thinking like an Economist
Questions
1) You’re at your local lunch restaurant. All lunch specials cost $15 and you have a gift card for $15 for this
restaurant that expires today. You eat only 1 dish for lunch. Table 1gives you the menu with your benefit
for each option, expressed in dollars.
Lunch Special Your benefit
Vegetarian $18
Beef $25
Chicken $20
Fish $14
Table 1: Lunch meal costs and benefits
1a) What is the cost1of choosing (buying and eating) the beef special?
1b) What is the opportunity cost of choosing the vegetarian option?
1c) If you read an article on health that says fish and vegetables are healthier option. It changes your benefits
from the vegetarian option to $19 and the fish to $23. What is the cost of choosing the beef option now?
1d) What do you choose to eat? Explain your reasoning using opportunity costs.
1e) I said that the gift card expired today. Does it matter for your analysis?
1f) I said that you have a gift card. Does it matter for your analysis?
2) You are choosing how many hours to spend studying this weekend. Your total benefit as a function of hours
spent studying in given in the table below. If you don’t study you work as a babysitter for $20 an hour.
No. of hours Total Benefit
1 $67
2 $126
3 $177
4 $220
5 $255
6 $282
7 $301
8 $312
8 $315
Table 2: Total benefit as a function of hours spent studying.
2a) How many hours do you study this weekend?
1Costs=opportunity costs for economists.
201909 1 of 4Problem Set 1 Questions
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Document Summary

Questions: you"re at your local lunch restaurant. All lunch specials cost and you have a gift card for for this restaurant that expires today. Table 1 gives you the menu with your bene t for each option, expressed in dollars. 1c) if you read an article on health that says sh and vegetables are healthier option. It changes your bene ts from the vegetarian option to and the sh to . 1e) i said that the gift card expired today. 1f) i said that you have a gift card. Does it matter for your analysis: you are choosing how many hours to spend studying this weekend. Your total bene t as a function of hours spent studying in given in the table below. If you don"t study you work as a babysitter for an hour. Table 2: total bene t as a function of hours spent studying.

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