Exam 3: Optimization: Doing the Best You Can

If Project A has a cost of $5 and provides a benefit of $10,and Project B has a cost of $2 and provides a benefit of $4,then switching from Project A to Project B ________.

Assume that an individual has to choose between two options,buying a cell phone or buying an iPad.The expected cost of buying a phone is $700 and the expected benefit is $900.The expected cost of buying an iPad is $300 and the expected benefit is $600.How does the individual arrive at the optimal choice if he implements: a)optimization using total value? b)optimization using marginal analysis?

Assume that an individual has to decide between a 2-day vacation and a 3-day vacation to the same place.If he uses optimization using marginal analysis,he will ________.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. -Refer to the scenario above.If Sarah is optimizing using marginal analysis,then which of the following statements is true?

Which of the following statements identifies a similarity between optimization using total value and optimization using marginal analysis?

Which of the following statements identifies a difference between optimization using total value and optimization using marginal analysis?

If Project A has a cost of $2 and provides a benefit of $3 and Project B has a cost of $5 and provides a benefit of $8,which of the following statements is true?

The Principle of Optimization at the Margin states that ________.

John has to choose between a camping holiday and a holiday in Las Vegas.If he evaluates the total net benefit of both alternatives before coming to a decision,he is using the technique of ________.

Does optimization at the margin have any advantage over optimization using total value? Explain with the help of a suitable example.

How do markets provide for an efficient allocation of scarce resources?

What are the different steps involved in optimization using marginal analysis?

Scenario: A firm wants to set up a factory. It has four different options. The rent of the factory in each of the four different locations and the time taken to transport the product from each location to the market is shown in the table below. The opportunity cost of time is $10 per hour. -Refer to the scenario above.Which is the optimum location for the firm to set up its factory?

If Project X has a cost of $6 and provides a benefit of $10 and Project Y has a cost of $25 and provides a benefit of $27,which of the following statements is true?

If the net benefit of Project A is $20 and that of Project B is $15,switching from Project A to Project B ________.

Optimization can be achieved using either of two techniques of cost-benefit analysis.Which of the following correctly identifies the techniques?

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour. -Refer to the scenario above.What is the total cost incurred per month if Ryan rents Apartment 3?

Both optimization using total value and optimization using marginal analysis ________.

Spending more time commuting in exchange for a lower monthly rent is an example of ________.

A cost-benefit calculation that focuses on the difference between a feasible alternative and the next feasible alternative is called ________.