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Tutorial

Tutorial. Wk1. Multiple Choice. High-school athletes who skip college to become professional athletes • obviously do not understand the value of a college education: 1 (6%) •usually do so because they cannot get into college.: 0 (0%)

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Tutorial

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  1. Tutorial Wk1

  2. Multiple Choice

  3. High-school athletes who skip college to become professional athletes • •obviously do not understand the value of a college education: 1 (6%) • •usually do so because they cannot get into college.: 0 (0%) • •understand that the opportunity cost of attending college is very high.: 4 (26%) • •are not making a rational decision since the marginal benefits of college outweigh the marginal costs of college for high-school athletes: 10 (66%) • •I don't know: 0 (0%)

  4. When calculating the cost of college, which of the following should you probably not include? • The cost of tuition: 0 (0%) • The cost of books required for college classes: 0 (0%) • The income you would have earned had you not gone to college: 7 (43%) • The cost of rent for your off-campus apartment, which you would have to rent anyways: 8 (50%) • I don't know: 1 (6%)

  5. Suppose your management professor has been offered a corporate job with a 30 percent pay increase. He has decided to take the job. For him, the marginal • cost of leaving was greater than the marginal benefit.: 4 (28%) • benefit of leaving was greater than the marginal cost: 8 (57%) • benefit of teaching was greater than the marginal cost.: 1 (7%) • All of the above are correct.: 1 (7%) • I don't know: 0 (0%)

  6. Russell spends an hour studying instead of playing tennis. The opportunity cost to him of studying is • •the improvement in his grades from studying for the hour.: 1 (6%) • •the improvement in his grades from studying minus the enjoyment of playing tennis: 2 (12%) • •the enjoyment and exercise he would have received had he played tennis: 10 (62%) • •zero. Since Russell chose to study rather than to play tennis, the value of studying must have been greater than the value of playing tennis: 3 (18%) • •I don't know: 0

  7. Open Questions 2,5,7

  8. Extra Review Question 1,3,5

  9. 􀂾 Define economics and discuss economic naturalism 􀂾 Understand why scarcity implies tradeoffs 􀂾 Define the Cost-Benefit Principle and illustrate its relationship to scarcity 􀂾 Understand how rationality relates to the Cost-Benefit Principle 􀂾 Define marginal benefit and marginal cost 􀂾 Define opportunity cost 􀂾 Calculate marginal benefit and marginal cost After studying this chapter you should be able to

  10. 􀂾 Define economics 􀂾 Discuss the topics covered in microeconomics 􀂾 Understand the efficient allocation of resources 􀂾 Identify which costs matter in making decisions 􀂾 Identify the opportunity cost of an activity 􀂾 Define sunk costs After studying this chapter you should be able to

  11. 􀂾 Identify sunk costs 􀂾 Apply the concept of sunk costs to cost-benefit analysis 􀂾 Define average cost 􀂾 Identify which costs matter in making decisions After studying this chapter you should be able to

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