Econ 231-Microeconomics-Dr. Sauley || with 100% Errorless
Solutions.
Suppose the most you would be willing to pay to have a freshly washed car before going out on a
date is $6. The smallest amount for which you would be willing to wash someone else's car is
$3.50. You are going out this evening and your car is dirty. How much economic surplus would
you receive from washing it? correct answers $2.50
Dean should play golf instead of preparing for tomorrow's exam in economics if:
A.)the economic surplus from playing golf is greater than the economic surplus from studying.
B.)he is irrational.
C.)the benefit of golfing is greater than the benefit of studying.
D.)Dean can play golf for free. correct answers A.)the economic surplus from playing golf is
greater than the economic surplus from studying.
Larry was accepted at three different graduate schools, and must choose one. Elite U costs
$50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at
$60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000
scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000
per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at
$15,000 per year. What is Larry's economic surplus from attending State College instead of his
next best alternative?
a.)$5,000
b.)$40,000
c.)$20,000
d.)$10,000 correct answers A.)$5,000
Alex received a four-year scholarship to State U. that covered tuition and fees, room and board,
and books and supplies. If Alex becomes a full-time student, then:
a.)the opportunity cost of attending State U. includes the money Alex could have earned working
for four years.
b.)the opportunity cost of attending State U. includes the sum of the benefits c.)Alex would had
from attending each of the other schools to which he was admitted.
d.)attending State U. for four years is costless for Alex.
Alex has no incentive to study hard while at State U. correct answers a.) the opportunity cost of
attending State U. includes the money Alex could have earned working for four years.
Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and
drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of
going to the beach is:
a.)the value she places on seeing the movie.
b.)the $12 she spent on the umbrella, food and drinks.
c.)only $0 because she would have spent $12 to go to the movie.
, d.)the value she places on seeing the movie plus the $12 she spent on the umbrella, food and
drinks. correct answers a.)the value she places on seeing the movie.
Your friends from the University of Cincinnati are planning to go to Miami for spring break, and
you are undecided about whether you should go with them. The round-trip airfare is $600, but
you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All
other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is
$1,400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two
weeks after the break to attend your sister's graduation, which your parents are forcing you to
attend. The Cincinnati-Atlanta round-trip airfare is $450. What is the opportunity cost of using
the coupon for the Miami trip?
a.)$450
b.)$500
c.)$550
d.)$100 correct answers a.)$450
For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which
gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100th meal is:
a.)$0.
b.)$6.
c.)$4.
d.)$0.25. correct answers a.)$0
You want to buy a TV that regularly costs $250. You can either buy the TV from a nearby store
or from a store that's downtown. Relative to going to the nearby store, driving downtown
involves additional time and gas. The downtown store, however, has a 10 percent off sale this
week. Last week you drove downtown to save $20 on some concert tickets, a 15 percent savings.
Should you drive downtown to buy the TV?
a.)Yes, because you will save more than $20.
b.)No, because you will save more than $20.
c.)Yes, because you will save 10 percent, which is better than nothing.
d.)No, because you will only save 10 percent, which is less than 15 percent. correct answers
a.)Yes, because you will save more than $20.
Suppose it takes Dan 5 minutes to make a sandwich and 15 minutes to make a smoothie, and it
takes Tracy 6 minutes to make a sandwich and 12 minutes to make a smoothie. Which of the
following statements is correct?
a.)Dan should specialize in sandwiches, and Tracy should specialize in smoothies.
b.)Tracy should specialize in sandwiches and smoothies.
c.)an should specialize in smoothies, and Tracy should specialize in sandwiches.
d.)Dan should specialize in both sandwiches and smoothies. correct answers a.)Dan should
specialize in sandwiches, and Tracy should specialize in smoothies.
If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she
devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all
his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time
