ECON 213 Problem Set ch. 1 Liberty University Solution

Suppose you own a bicycle but haven't found the time to ride it much lately. These days, it is only worth $42 to you. One of your close friends, who recently got a job at the college bookstore two miles down the road, wants to take it off your hands. He offers you $70 for the bicycle, and you gladly accept. Your friend is also happy because he thinks the bicycle is worth $91. How much total value was created from this trade?

You have always thought that learning to scuba dive would be fun. However, this activity would cost money and require time away from other activities. This is an example of

For spring break, you have to decide between going on a cruise with friends and going on a service trip with Alternative Spring Break. You could also stay at home, work, and earn some extra money, but this would be less valuable to you than either experience. If you choose going on a cruise, what is your opportunity cost?

In Chapter 1, you learned that buying and selling textbooks are two separate decisions made at the margin. Textbooks create value both when they are bought and when they are sold. Think about your decision to buy the textbook for this course. You paid $225 for the book, but you would have been willing to pay $500 to use the book for the semester. Suppose that at the end of the semester you could keep your textbook or sell it back to the bookstore. Once you have completed the course, the book is worth only $50 to you. The bookstore will pay you 50% of the original $225. How much total value have you gained?

James spent 8 hours studying for an exam, and he received an A on the exam. Normally, he would have spent that time watching TV instead of studying. James figures he could have made a B after studying only 4 hours, but he really wanted an A. What is James ’s marginal cost in terms of TV viewing to move from a B to an A on the exam?

You are trying to decide whether to pay a lawn-mowing service $300 or do the work yourself. It would be rational to hire a lawn-mowing service if

9. In Chapter 1, you learned that buying and selling textbooks are two separate decisions made at the margin. Textbooks create value both when they are bought and when they are sold. Think about your decision to buy the textbook for this course. You paid $200 for the book, but you would have been willing to pay $450 to use the book for the semester. Suppose that at the end of the semester you could keep your textbook or sell it back to the bookstore. Once you have completed the course, the book is worth only $70 to you. The bookstore will pay you 50% of the original $200.

10. Like a good economist, you calculated the opportunity cost of getting your college degree. Suppose that at your university, you will pay $15000 each year for tuition, $3000 each year for textbooks, and $10000 per year for room and board. Before you left for college, your boss at your high-school job offered you a job paying $20000 per year. Assume that if you decided not to go to college, your parents would not let you live at home.

What is your opportunity cost for four years of college? $

11. systems that bring buyers and sellers together to exchange goods and services

12. the study of the individual units that make up the economy