Exam (elaborations)
Michigan State University EC 201 Midterm -1 With Complete Solutions Graded A+
- Course
- Institution
Michigan State University EC 201 Midterm -1 With Complete Solutions Graded A+
[Show more]
Seller
Follow
Content preview
10/12/24, 12:18 PMMichigan State University EC 201 Midterm #1
Jeremiah
Terms in this set (104)
1) Blake is considering vaping. One of his friends just quit vaping and has offered
Blake his Juul for free, but only if Blake is going to use it himself. If Blake does start
C. If Blake starts to vape, he will have to vaping, he will spend $20 per week on Juul pods. Additionally, Blake's girlfriend will
pay the monetary cost of $20 per week on break up with him if he starts vaping. What is the opportunity cost of vaping for
Juul pods and he is faced with the cost of Blake?
his girlfriend breaking up with him. A) $20 per week
B) Zero, because he got the Juul for free
C) $20 per week and his girlfriend
B. There are only so many resources in the 2) The main reason why you cannot have everything you want is that:
world and limited time, money, and A) Taxes are too high
attention coupled with Demand prevents B) Resources are limited
us from obtaining everything we want. C) Opportunity costs are equal to zero
3) Michigan State University decides fine everyone who leaves an electric scooter
A. In this situation, you valued your class
on a walkway 20dollars. One day, you are in a hurry to get to class and don't have
time more than the $20 you would have to
time to park your scooter where itgoes. So, you leave your scooter on the walkway,
pay for leaving your scooter on a walkway.
knowing that you will get fined 20 dollars. Which of the following is most likely to be
If you believed your class time was worth
true:
less than $20, then you would have parked
A) The benefit you got from being to class on time was greater than $20
your scooter in the correct area in order to
B) Your willingness to pay to get to class on time was less than $20
prevent yourself from being fined.
C) You acted irrationally and didn't follow the cost-benefit principle
4) You are interested in learning whether increasing sales taxes would benefit the
A. we are dealing with a sales tax in a city, economy of East Lansing. This would be best described as:
not a big national-level question A) Microeconomics
B) Macroeconomics
5) You are the fifteenth caller for a contest at your favorite radio station and win your
B. The opportunity cost would be the next choice of three concert tickets: Post Malone, Taylor Swift, and the Jonas Brothers.
alternative you could have chosen in a You choose Post Malone, because that is your favorite performer. Your second
given situation, so as you can only select choice would have been the Jonas Brothers. What is the opportunity cost of the
one ticket in this case you would miss out concert tickets?
on the Jonas Brothers tickets by choosing A) Zero, because they were free
the Post Malone tickets. B) The Jonas Brothers tickets
C) The Jonas Brothers tickets and the Taylor Swift tickets
1/24
,10/12/24, 12:18 PM
D. In some instances, it is possible that 6) Which of the following is definitely an example of someone not acting in their self-
actions like those above could be in the interest?
best interest of an individual. A drug addict A) A drug addict using heroin
may need heroin to prevent symptoms of B) A criminal robbing a bank
withdrawal, a criminal may need to rob a C) A person buying an expensive car
bank in order to obtain money, and a D) None of the above; each of these could be an instance where someone is acting
person buying an expensive car may enjoy rationally and in their own best interest.
how fast it is compared to other cars.
A. Marginal benefit looks at the benefit 7) You are binge watching Riverdale on Netflix and have one episode left in the
received by the addition of one unit of season. Which of the following would be describe the marginal benefit of watching
something (hiring another worker, eating that last episode?
one more piece of candy, watching one A) The enjoyment you get from watching the last episode
more episode). Therefore, the marginal B) The total enjoyment you received from the first season
benefit of watching the last episode of C) The hour that you could have spent studying economics (your best possible
Riverdale would be the enjoyment you alternative use
received from solely watching that of the time, of course)
episode.
8) To keep the local professional football team from leaving, the city of San Diego
proposed a tax on hotel rooms that would be used to fund a new football stadium.
Many people are opposed to using tax revenues to fund sports stadiums. The mayor
C. While the additional tax revenue could
argued that, because the tax would be paid by out-of-town visitors, the new stadium
be used to fund a new stadium, there are
would be "free" for residents. Which of the following statements is most accurate?
also many other uses of the funds that
A) The mayor is correct
could be used to benefit residents in other
B) The mayor is forgetting about the opportunity cost of having a football team
ways, making these alternatives the
instead of having another sports team
opportunity costs that come from the
C) The mayor is forgetting about the opportunity cost of spending the tax revenue
mayor's decision.
on a new stadium instead of on something else
D) The mayor is forgetting about the marginal benefits residents receive from the
football stadium
9) Jane enjoys streaming The Office, but she finds that, because she has seen every
episode several times, she gets bored of them quickly. In fact, in a given binge-watch
session, she enjoys each
B. Jane's marginal benefit is decreasing
episode less than the one before it. Jane uses her parent's logins for streaming
because her enjoyment of each additional
services, so it doesn't cost her any money to watch the episodes. For Jane, watching
episode watched is less than the episode
The Office on has ____ marginal
she watched before while her marginal
benefits and ____ marginal costs. (Assume the only costs are monetary costs.)
costs are constant as she does not have to
A) Decreasing; Increasing
pay to watch the episodes.
B) Decreasing: Constant
C) Constant; Increasing
D) Increasing; Decreasing
A field experiment at an all-you-can-eat pizza restaurant shows that a 50% discount
on the price of the meal led customers to consume 27.9% less pizza. In other words,
when people have to pay a higher price for their meal, they want to "get their
A. The marginal cost would be $0. This is money's worth" by eating more pizza.
because the customer has already paid to
gain access to the buffet, and each 10) Suppose the regular price of the buffet is $10 and the discounted price is $5.
additional slice that customer eats does not Once a customer has paid for the buffet, what is the marginal cost of eating another
require additional payment as it is all-you- slice of pizza? (Assume the only costs are monetary costs.)
can-eat. A) $0
B) $5
C) $10
D) It depends on whether the customer is getting a discount.
2/24
, 10/12/24, 12:18 PM Michigan State University EC 201 Midterm #1 Flashcards | Quizlet
A field experiment at an all-you-can-eat pizza restaurant shows that a 50% discount
on the price
of the meal led customers to consume 27.9% less pizza. In other words, when people
B. A rational decision is made when the
have to
marginal benefit of an action is greater than
pay a higher price for their meal, they want to "get their money's worth" by eating
or equal to the marginal cost. As
more pizza.
referenced in the previous question, the
marginal cost of eating an additional slice
11) This actually does not fit with what we have learned about rational decision
of pizza is $0 once the customer has
making and how people make decisions on the margins. Why?
already paid to gain access to the buffet.
A) The customers are not accounting for the opportunity cost of eating pizza instead
Therefore, assuming the marginal benefit of
of another meal
the pizza is the same in both scenarios(no
B) The marginal cost of a slice of pizza is zero for all customers, so all customers
discount and 50% discount), we would not
(whether or not they are receiving a discount) should consume until the point where
expect a customer to consume less pizza
the marginal benefit of the last slice of pizza is zero. This means that the price paid
when they are faced with the 50% discount,
should not affect consumption
as they would normally continue to benefit
C) The marginal cost of a slice of pizza is greater for customers paying the higher
from eating additional slices when they did
price. This means that marginal benefit will equal marginal cost at a lower quantity, so
not receive a discount.
consumers paying a higher price should eat less pizza.
D) All-you-can-eat pizza restaurants have bad pizza, and rational people would
never go to that type of restaurant
B. As customers who paid lower prices 12) After the researchers conducted this part of the experiment, they did another
didn't feel the need to "get their money's analysis. They surveyed the customers after they ate and asked them to rate the taste
worth" they only ate pizza for which they of the pizza. Based on what we have learned about diminishing marginal benefits,
enjoyed. We would expect Customers who who would we expect to give the pizza a higher rating?
paid the lower price, because they didn't A) Customers who paid the higher price, because the pizza is worth more to them
eat as many slices and therefore avoided B) Customers who paid the lower price, because they didn't eat as many slices and
the slices that gave a lower marginal utility therefore avoided the slices that gave a lower marginal utility
Ray is deciding how to spend the next four hours. He will use the time to play the
computer game Valorant or to study for his math test, or to do some combination of
the two.
13) Ray's main goal in playing Valorant is to gain lots of XP (Experience Points), which
he earns by playing the game well. The below table shows the total XP Ray earns
playing Valorant.
A. Ray's marginal benefit from playing a
third hour would be 250. Ray earns 1,750 XP Hours played Total XP earned
from playing two hours, and 2,000 XP for 1 1,000
playing three hours. Therefore, 2,000 - 1,750 2 1,750
= 250, which is the additional XP he gains 3 2,000
during that third hour of play. 4 2,200
What is the marginal benefit (in terms of XP) that Ray gets from the third hour of
playing Valorant?
A) 250
B) 667
C) 1000
D) 2,000
Michigan State University EC 201 Midterm #1
https://quizlet.com/733305559/michigan-state-university-ec-201-midterm-1-flash-cards/ 3/24
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Denyss. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $11.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
76800 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now