Chapter 1, The Core Principles of Economics Video Solutions, Principles of Microeconomics

Problem 1

Consider the following statement: "Economists always put things into monetary terms; as a result, economics can most appropriately be called the study of money."
Is this true or false? Briefly explain your reasoning.

Rashmi Sinha

Numerade Educator

Problem 2

Use the cost-benefit principle to evaluate the following:
a. You are about to buy a calculator for $$\$ 10$$, and the salesperson 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. Would you make the trip?
b. You are about to buy a laptop for $$\$ 1,000$$ and the salesperson 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. Would you make the trip?
c. Did you make the same choice in both cases? Should you have? Do you think this is how people actually choose?

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06:23

Problem 3

. During the economic downturn of 2008-2009, the unemployment rate increased to nearly $10 \%$. At the same time, the price of college tuition and the number of college enrollees increased. Using the opportunity cost principle, explain why more people would enroll in college during this time period even as the price of college increased.

Pragya Ahuja

Numerade Educator

00:35

Problem 4

A friend once remarked that longer movies were a better deal than shorter movies because the ticket price was the same in both cases. Therefore, the longer movie provided more benefit for the same cost as a shorter movie. Using the opportunity cost principle, evaluate your friend's statement.

James Kiss

Numerade Educator

Problem 5

In 2016, the top-selling pharmaceutical drug in the world was AbbVie's Humira, which is used for the treatment of several common, chronic conditions. The majority of its profits are derived from treatment of the most common diseases, so why does AbbVie develop drugs for rare diseases instead of investing all of its resources toward drugs for common diseases? Use the marginal principle to briefly explain your answer.

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Problem 6

You are a preschool teacher working at a public school, but are considering quitting your job to start a day-care facility of your own. Describe four types of dependencies that will affect your decision, with at least one example for each.

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