Exam 2: The Economic Way of Thinking

The following table shows the marginal benefit to a consumer of DVD rentals. DVD rentals per month Marginal Benefit (in dollars) 1 \ 8.50 2 \ 7.50 3 \ 6.50 4 \ 5.50 5 \ 4.50 6 \ 3.50 7 \ 2.50 8 \ 1.50 If the price of a DVD rental is $4, a consumer following the rule of rational choice will rent:

The price of a ticket to the latest Broadway musical is $80.You will purchase a ticket if:

The marginal benefit to Lasca of weekend vacations during the year at a local resort are given by the following schedule: Number of Weekend Vacations Marginal Beneft 1 \ 600 2 \ 550 3 \ 475 4 \ 325 5 \ 250 6 \ 180 If the marginal cost of a weekend vacation at the local resort is constant and equal to $350, how many weekends at the local resort is Lasca likely to enjoy?

Trent decides to spend an hour playing basketball rather than studying.His opportunity cost is:

The following table shows the marginal benefit to an individual of consuming pints of beer. Pints af beer Marginal Benefit 1 \ 7.00 2 \ 5.00 3 \ 3.00 4 \ 2.00 5 \ 1.00 6 \ 0.50 7 -\ 1.00 If the price of each pint is $4.00 at this establishment, a rational consumer would purchase

If race-car driving is dangerous, why would any rational person choose to be a race-car driver?

Most disagreements among economists stem from normative issues.

"If the price of wine increases, the quantity purchased will increase." Is this a positive or a normative economic statement? Explain your answer.

If a student enrolls in an additional course at the university, an economist would conclude that:

An entrepreneur organizes the other factors of production and bears the business risk.

Thelma, with no money in her bank account, estimates that there is a 25% chance that she will get caught stealing a Porsche.According to an economist, it may be rational for Thelma to steal the Porsche if:

Table 2-A Possibility A Econamics History I 94 76 II 87 84 III 77 9! -Refer to Table 2-A.A student has only a few hours to prepare for two different exams this afternoon.The above table shows alternative possible exam scores with three alternative uses of the student's time.The opportunity cost of scoring a 94 on the economics exam rather than a 77 is:

Economic models are of limited use since they cannot be tested empirically.

When two variables repeatedly change at the same time, there must be a causal relationship between them.

"Ceteris paribus" is a Latin expression that means "holding everything else constant."

Mike is able to complete a tax return in two hours earning a fee of $100.As an alternative, he could pitch in at a volunteer car wash washing four cars in one hour.His roommate Joe would take four hours to complete a tax return earning a $100 fee and also can wash four cars in one hour.Both individuals could benefit if

Lance's boss offers him twice his usual wage rate to work tonight instead of taking his girlfriend on a romantic date.This offer will likely:

The opportunity cost of attending a university for a year is measured by:

According to the rule of rational choice, an individual will undertake an activity as long as:

Rational individuals act to advance their own self-interest; therefore, charitable giving must constitute irrational behavior.