1. In each of the following situations, identify which of the twelve principles
ID: 1132625 • Letter: 1
Question
1. In each of the following situations, identify which of the twelve principles is at work. This includes the3 macro principles that we won't be studying in detail in this course but you still should be familiar. (12 points - I points each part) a. You decide how many cups of coffee to have when studying the night before an exam by considering how much more work you can do by having another cup versus how jittery it will make you feel. b. You choose to shop at the local discount store rather than paying a higher price for the same merchandise at the local department store. c. On your spring break trip, your budget is limited to $35 a day d. Your parents' after-tax income has increased because of a tax cut passed by Congress. They therefore increase your allowance, which you spend on a spring break vacation. e. The student union provides a website on which departing students can sell items such as used books, appliances, and furniture rather than giving them away to their roommates as they formerly did. f. At the student union, there is a bulletin board on which people advertise used items for sale, such as bicycles. Once you have adjusted for differences in quality, all the bikes sell for about the same price. g. You are better at performing lab experiments, and your lab partner is better at writing lab reports. So the two of you agree that you will do all the experiments, and she will write up all the reports h. After a hurricane did extensive damage to homes on the island of St. Crispin, homeowners wanted to purchase many more building materials and hire many more workers than were available on the island. Asa result, prices for goods and services rose dramatically across the board. i. You buy a used textbook from your roommate. Your roommate uses the money to buy songs from iTunes. j. There is limited lab space available to do the project required in Chemistry 101. The lab supervisor assigns lab time to each student based on when that student is able to come. k. You realize that you can graduate a semester early by forgoing a semester of study abroad. I. State governments mandate that it is illegal to drive without passing a driving exam. 2. Use the concept of opportunity cost to explain the following: (10 points) a. More people choose to get graduate degrees when the job market is poor . More people choose to do their own home repairs when the economy is slow and hourly wages are down. . Convenience stores, which have higher prices than supermarkets, cater to busy people. There are more parks in suburban than in urban areas.Explanation / Answer
A- true cost of an item is the opportunity cost.
B- people usually respond to incentives,exploiting opportunities to make themselves better off.
C-choices are necessary because resources are scarce.
D- people usually respond to incentives,exploiting opportunities to make themselves better off.
- Government policies can change spending
E- resources should be efficiently used to achieve society goal.
F-when markets dont achieve efficiency,goverment intervention can improve society's welfare.
G- market's move towards equilibrium,just like the two friends found a balance .
H- overall spending can get out of line with economy's production capacity
I- there are gains from trade
J-resources should be used efficiently to achieve society goal
K-true cost of an item is the opportunity cost
L- government policies can change spending
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