Question

1. You are given a choice between a Koenigsegg CCXR Trevita (with a purchase price of $4.8m) or Cheesecake made by Professor Marks’s wife, Lynne.  Ignoring everything else, you decide on the Cheesecake.  What is the opportunity cost of such selection in dollar terms?

2. Congratulations, you have three job offers.  The first job pays $72,500 / year; the second job pays $58,000 / year; and the third job pays $35,000 / year.  What is the opportunity cost for the first job?

3. Suppose you are in charge of setting prices for parking permits.  Evaluate the following data:

The Quantity Demanded for Parking Permits at $100 is 12,774; and

The Quantity Demanded for Parking Permits at $200 is 7,265.

4. Suppose you are in charge of setting prices for parking permits.  Evaluate the following data:

The Quantity Demanded for Parking Permits at $100 is 12,774; and

The Quantity Demanded for Parking Permits at $200 is 7,265.

Calculate the mid-point elasticity of demand to two decimal places.

Should you increase the price:

5. Can raising the price be considered good in the following situation:  Local businesses in reaction to a natural disaster raise prices.  As a result of this situation, some people buy several generators and then drive hundreds of miles and sell those generators at twice the price.

6. Laura Joffee Numeroff, If You Give a Mouse a Cookie, introduces to children an economic concept that impacts our lives.  Read the following excerpt:  “If you give a mouse a cookie, . . . He’s going to ask for a glass of milk . . . When you give him the milk he’ll probably ask you for a straw . . . When he’s finished, he’ll ask you for a napkin."

Assume the price of cookies decreases:

7. Laura Joffee Numeroff, If You Give a Mouse a Cookie, introduces to children an economic concept that impacts our lives.  Read the following excerpt:  “If you give a mouse a cookie, . . . He’s going to ask for a glass of milk . . . When you give him the milk he’ll probably ask you for a straw . . . When he’s finished, he’ll ask you for a napkin."

Assume the price of cookies decreases, what are the implications for Milk, which is a complementary good:

8. Laura Joffee Numeroff, If You Give a Mouse a Cookie, introduces to children an economic concept that impacts our lives.  Read the following excerpt:  “If you give a mouse a cookie, . . . He’s going to ask for a glass of milk . . . When you give him the milk he’ll probably ask you for a straw . . . When he’s finished, he’ll ask you for a napkin."

Assume the price of cookies decreases, what are the implications for Cupcakes, which is a substitute good:

Group of answer choices

Quantity Demanded for Cupcakes Increase

Demand for Cupcakes Increases

Quantity Demanded for Cupcakes Decrease

Demand for Cupcakes Decreases

Answer 1

1. The opportunity cost of choosing cup cake is the price of opportunity gone. Thus ,in the given case the opportunity cost is $4.8m.

2. The opportunity cost of selecting a thing is the cost of next best alternative gone. If he is choosing 1st job, then the next best alternative between job 2nd and 3rd is job 2nd. Thus, the opportunity cost of choosing job 1 is $58000.

3.the answer of this part iS -0.825 Explained in the image.  

4.the raising price in this situation is not considered good, because if they rose their prices in this situation then tje overall demand would fall and this would leads to the fall in their revenue and the benefit of these lrice rising would also be more riped by the other sellers not the local ones.

5.if the price of cookie fall then the demand of milk would rise. Because as given milk and biscuits are complimentary goods. Thus, with fall in price of cookie, demand of cookies would rise and because with biscuit, milk is a complimentary good thus, demand of milk would also rise.

6.if the price of cookies falls then the demand of cookies would rise and demand of cupcakes would fall because as we know, these goods are substitute good i. e., one good can be used in place of other. Thus, as one good is cheaper (cookie due to price fall) then one would definitely go for it and reduce the demand of expensive (cupcakes) good.