Chapter 2: The One Lesson of Business

2-2 Selling Used Cars

I recently sold my used car. If no new production occurred for this transaction, how could it have created value?

2-3 Flood Insurance

The U.S. government subsidizes flood insurance because those who want to buy it live in the flood plain and cannot get it at reasonable rates. What inefficiency does this create?

Chapter 3: Benefits, Costs, and Decisions

3-2 Concert Opportunity Cost 2

You were able to purchase two tickets to an upcoming concert for $100 apiece when the concert was first announced three months ago. Recently, you saw that StubHub was listing similar seats for $225 apiece. What does it cost you to attend the concert?

3-5 Starbucks

Starbucks is hoping to make use of its excess restaurant capacity in the evenings by experimenting with selling beer and wine. It speculates that the only additional costs are hiring more of the same sort of workers to cover the additional hours and costs of the new line of beverages. What hidden costs might emerge?

3-7 Business Costs

A business incurs the following costs per unit: labor $125/unit, materials $45/unit, and rent $250,000/month. If the firm produces 1,000,000 units a month, calculate the following:

1. Total variable costs
2. Total fixed costs
3. Total cost
4. send-of-text citations should be included.