Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 1, Problem 1.4P
To determine
The relevance of scarcity.
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On the Forbes 2021 list of the World’s Billionaires, Jeff Bezos ranks at the topwith a net worth of US$177 billion. Does he face scarcity, or does scarcity onlyaffect those with more limited incomes and lower net worth?
On the Forbes list of the World's Billionaires, Elon Musk, Bernard Arnault, and Jeff Bezos rank at the top with net worth above $186 billion each. Is the following statement True, False, Both (True and False), or None (neither True nor False) "These richest people in the world do not face scarcity. Scarcity only affects people who are not in the Forbest list
Katie loves swimming. Every afternoon, she visits the local swimming pool for a swim. The entry cost to the pool
costs Katie $10 but she can swim for as long as she wants. Once she has entered the pool and paid the fee, Katie
wonders how many hours should she spend swimming if she were to think like an economist. She expects to gain
an incremental benefit of $21 from the first hour of swimming, then gains subsequent incremental benefits of $17
from the second, $11 from the third and $4 from the fourth. For every hour spent swimming, it will cost Katie $6 as
she could have spent the time doing her homework.
In determining how many hours Katie should be swimming, the $10 entry fee to the pool is a/an
Type A for Average cost, M for Marginal cost, S for Sunk cost or O for Opportunity
cost.
Using marginal analysis, what is the optimal amount of hours Katie should spend swimming?
The maximum surplus for Katie, from spending the number of hours you found in part b, is $
Answer to the nearest…
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- If a family spends its entire budget in a given time frame, the family can afford either 95 cans of vegetables or 40 frozen dinners. Assuming the family spends its entire budget on just these two goods, what is the opportunity cost of a can of vegetables in the time frame?arrow_forwardYou have just woken up and are deciding whether to sleep for one more hour or not. If you don’t go back to sleep, the following is a list of the different things you could do (along with the value you would get from doing each). You could work-out (and get a $100 value) or you could watch TV (and get a $250 value) or you could read the newspaper (and get a $30) or you could eat breakfast (and get a $170 value). What is your opportunity cost of going back to sleep for one more hour? a) $250 b) $550 c) $100 d) $170 e) $ 50arrow_forwardYou have just woken up and are deciding whether to sleep for one more hour or not. If you don’t go back to sleep, the following is a list of the different things you could do (along with the value you would get from doing each). You could work-out (and get a $100 value) or you could watch TV (and get a $250 value) or you could read the newspaper (and get a $30) or you could eat breakfast (and get a $170 value). What is your opportunity cost of going back to sleep for one more hour? a)$250 b) $100 c) $170 d) $50arrow_forward
- Why is economics is deeply rooted in the concept of scarcity?arrow_forwardMarie has a weekly budget of $24, which she likes to spend on magazines and pies. If the price of a magazine is $4 each, what is the maximum number of magazines she could buy in a week? If the price of a pie is $12, what is the maximum number of pies she could buy in a week? What is Marie’s opportunity cost of purchasing a pie? At the start of the week, Marie decides to buy a pie. Does this imply that the utility she receives from this pie is greater than or less than her opportunity cost of purchasing the pie? Marie is thinking about purchasing a second pie. Do we expect the marginal utility she receives from the second pie to be greater than, less than, or equal to the marginal utility she receives from the first pie? Explain your answer.arrow_forwardEconomist Paul Heyne wrote a famous economic principles textbook entitled The Economic Way of Thinking. Based on your studies and reading from Module 1, write a short essay outlining what you understand to be “the economic way of thinking”? What are the key principles and tenets that any educated person should know regarding the science of economics and their applicability in the world today?arrow_forward
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