Fiona shares an office with her ex-husband. Her share of the rent and utilities is $625 per month. She is considering moving to a home office which she will not have to share with anyone
The home office will not cost her anything as far as extra rent or utilities. Recently, you ran into Fiona at the gym and she tells you that she has moved into her home office. Fiona is as rational as any other person. As an economics major, you rightly conclude that
A) Fiona did not have a choice; her ex-husband was a jerk.
B) Fiona figures that the benefit of having her own office (as opposed to sharing) is zero, since she is no longer paying rent and utilities.
C) Fiona figures that the additional benefit of having her own office (as opposed to sharing) is at least $625.
D) The cost of having one's own space outweighs the benefits.
C
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Kevin is a student who is yet to join a university in California. In the evening, he takes music lessons. Kevin has to decide on an apartment to rent
The apartment should be at a suitable distance from two places: his university, and from his music classes. The commuting time from apartments in four different locations to both destinations are shown in the table below. Given that Kevin's opportunity cost of time is $10 per hour, find his optimum choice using: a) optimization in levels. b) optimization in differences. Apartment Commuting Time to University (hours per month) Commuting Time to Music Classes (hours per month) Rent ($ per month) 1 10 10 2,500 2 16 24 2,200 3 36 24 1,900 4 45 35 1,800
Refer to Table 4-1. The table above lists the highest prices three consumers, Tom, Dick, and Harriet, are willing to pay for a short-sleeved polo shirt. If the price of one of the shirts is $28 dollars
A) Tom will receive $12 of consumer surplus from buying one shirt. B) Harriet will receive $25 of consumer surplus since she will buy no shirts. C) Tom will buy two shirts, Dick will buy one shirt and Harriet will buy no shirts. D) Tom and Dick receive a total of $70 of consumer surplus from buying one shirt each. Harriet will buy no shirts.
A subsistence economy is
a. a very low income economy. b. an economy in which people make what they consume. c. an economy in which people receive food for pay. d. all of the above.
The demand curve facing a firm will be more elastic the
a. fewer the number of competing firms b. more differentiated the product c. more substitutes available d. greater the firm's ability to control price e. more profit the firm makes