Use the cost-benefit principle to evaluate the following:

1) You are about to buy a calculator for $10, and the sales-person tells you that the model you want to buy is on sale for $5 at the store's other branch, which is a 20 minute drive away.

You should make the trip to the other branch if?

a) your cost of making the trip is less than $5

b) your cost if making the trip is more than $5

2)You are about to buy a laptop for $1,000 and the sales-person tells you that the model you want to buy is on sale for $995 at the store's other branch, which is a 20 minute drive away.

You should make the trip to the other branch if:

a) your cost of making the trip is more than $5

b) your cost of making the trip is less than $5

3) Your choice in part 1 and 2 should: Same or Different in both scenarios. But some people may ignore costs and focus on the percentage saved because: Marginal Costs or Sunk Costs change how people view the decision.

4) Jia is considering whether to go out to dinner at a restaurant with her friend. The meal is expected to cost $40, Jia typically leaves a 20% tip, and an Uber will cost $5 each way. Jia values the restaurant meal at $25. Jia enjoys her friend's company and is willing to pay $30 just to spend an evening with her. If Jia does not go out to the restaurant, she will eat at home, using groceries that cost her $8.

a) Calculate Jia's costs associated with going out to dinner with her friend.

b) Calculate Jia's benefits associated with going out to dinner with her friend.

c) Based on the information, Jia should: Go out to dinner with her friend or Eat at home

5) Consider each decision in the context of the four core principles of economics.

Gilberto is deciding whether to vote in the next election.

a) apply to this decision because Gilberto should consider the costs and benefits associated with voting.

b)do not apply to this decision because voting behavior is studied in political science.

c)apply to this decision because Gilberto's vote is a marginal vote that could determine the outcome of the election.

d)do not apply to this decision because there is no cost involved in voting.

6) Lee watches a beautiful sunset from the back porch of his house.

The four core principles of economics:

a)do not apply because no decision is being made.

b)apply because Lee could have been doing something else.

c)apply because Janet is also watching the sunset.

d)do not apply because no money is involved.

7) Lilia is deciding whether to major in economics or philosophy.

The four core principles of economics

a)do not apply because both programs cost the same and take the same amount of time to complete.

b)apply because Lilia should choose the major that provides the greatest economic surplus.

c)apply because economics majors earn higher salaries.

d)do not apply because Lilia may change her major later.

8.Brendon and Jessica are deciding whether to purchase a second vehicle.

The four core principles of economics

a) apply because Brendon and Jessica will have to give up something else to purchase the second vehicle.

b) do not apply because there is good public transportation where Brendon and Jessica live.

c) do not apply because Brendon and Jessica do not need a second vehicle.

d) apply because Brendon and Jessica want a second vehicle.

9) Aliyah is preparing to expand her IT consulting company. The current market rate for IT professionals is $58,000 per year. Each employee she hires will also require a computer and equipment that costs $6,000 per employee annually. Hiring more employees means that Aliyah can provide consulting services to more clients each year. Each client Aliyah has will pay her $10,000 per year.

The number of clients Aliyah can take on is dependent on the number of workers she hires and is depicted in the accompanying table.

-Use this information to calculate the marginal cost and the marginal benefit of hiring each worker:

Number of workers Client per year

0 0

1 11

2 20

3 27

4 32

a) The first worker's marginal cost is $____ e) The first workers marginal benefit is $____

b) The second worker marginal cost is $____ f) The second worker marginal benefit is $___

c) The third worker marginal cost is $____ g) The third worker marginal benefit is $___

d) The fourth worker marginal cost is $___ h) The fourth worker marginal benefit is $__