New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Home Work 1 Solutions

by: Shahaji Deshmukh

Home Work 1 Solutions ECO108

Marketplace > Stony Brook University > Economcs > ECO108 > Home Work 1 Solutions
Shahaji Deshmukh
Stony Brook U

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Solutions to home work 1
Introduction to Economics
Eva Carceles-Poveda
Class Notes
25 ?




Popular in Introduction to Economics

Popular in Economcs

This 5 page Class Notes was uploaded by Shahaji Deshmukh on Sunday April 17, 2016. The Class Notes belongs to ECO108 at Stony Brook University taught by Eva Carceles-Poveda in Spring 2016. Since its upload, it has received 15 views. For similar materials see Introduction to Economics in Economcs at Stony Brook University.


Reviews for Home Work 1 Solutions


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 04/17/16
ECO 108: Introduction to Economics Problem Set 1 Chapter 1 Professor: Yair Tauman 1. Economics is best defined as the study of  A. prices and quantities. B. inflation and interest rates. C. the way people make choices under scarcity and the outcome of their choices. D. wages and incomes. 2. The logical implication of the scarcity principle is that  A. one will never be satisfied with what one has. B. as wealth increases, making tradeoffs becomes less necessary. C. as wealth decreases, making tradeoffs becomes less necessary. D. choices must be made.    3. Forest is a mountain man living in Montana in complete isolation. He is completely  self­sufficient through hunting, fishing, and farming. He has not been in the city to buy  anything in five years. One can infer  A. the scarcity principle does not apply to Forest. B. Forest is not required to make choices. C. the scarcity principle still applies because more hunting means less fishing and  farming. D. Forest is very satisfied. 4. The scarcity principle applies to  A. all decisions. B. only market decisions, e.g., buying a car. C. only non­market decisions, e.g., watching a sunset. D. only the poor. 1 5. Whether studying the size of the U.S. economy or the number of children a couple will choose to have, the unifying concept is that needs are  A. limited, resources are limited, and thus tradeoffs must be made. B. unlimited, resources are limited, and thus tradeoffs must be made. C. unlimited, resources are limited to some but not to others and thus some people must  make tradeoffs. D. unlimited, resources are limited, and thus government needs to do more. 6. When a person decides to pursue an activity as long as the extra benefits are at least  equal to the extra costs, that person is  A. violating the cost­benefit principle. B. following the scarcity principle. C. following the cost­benefit principle. D. pursuing the activity too long.   7. The 7  glass of soda that Tim consumes will produce an extra benefit of 10 cents and  has an extra cost of zero (Tim is eating at the cafeteria). The cost­benefit principle  predicts that Tim will  A. realize he has had too much soda to drink and go home. B. drink the 7  glass and continue until the marginal benefit of drinking another glass of  soda is zero. th C. drink the 7  glass and stop there. D. not drink the 7  glass. 8. Dean decided to play golf rather than prepare for his exam in economics that is the day after tomorrow. One can infer that  A. Dean has made an irrational choice. B. Dean is doing poorly in his economics class. C. the economic surplus from playing golf exceeded the surplus from studying. D. the cost of studying was less than the cost of golfing. Use the following to answer questions 9­11: 2  Larry was accepted at three different graduate schools, and must choose one. Elite U  costs $50,000 per year and did not offer Larry any financial aid. Larry values attending  Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an  annual $10,000 scholarship. Larry values attending State College at $40,000 per year.  NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship.  Larry values attending NoName at $15,000 per year. 9. The opportunity cost of attending Elite U is  A. $50,000 B. $10,000 C. $20,000 D. $15,000 10. The opportunity cost of attending State College is  A. $30,000 B. $20,000 C. $15,000 D. $10,000 11. The opportunity cost of an activity is the value of  A. an alternative surplus forgone. B. the next­best alternative surplus forgone. C. the least­best alternative surplus forgone. D. the difference between the surplus of chosen activity and the next­best alternative  surplu forgone. 12. Economic surplus is  A. the benefit gained by taking an action. B. the price paid to take an action. C. the difference between the benefit gained and the cost incurred of taking an action. D. the wage someone would have to earn in order to take an action. 13. Alex received a four­year scholarship to State U. that covered tuition and fees, room  and board, and books and supplies. As a result  A. attending State U. for four years is costless for Alex. B. Alex has no incentive to work hard while at State U. C. the cost of attending State U. is the amount of money Alex could have earned working for four years. D. the cost of attending State U. is the sum of the benefits Alex would have had attending each of the four other schools to which Alex had been admitted. 3 14. Suppose the most you would be willing to pay for a plane ticket home is $250, but  you buy one online for $175. The economic surplus of buying the online ticket is:  A. $175. B. $250. C. $75. D. $0. 15. Economists use abstract models because  A. every economic situation is unique, so it is impossible to make generalizations. B. every economic situation is essentially the same, so specific details are unnecessary. C. they are useful for describing and derive general patterns of behavior. D. computers have allowed economists to develop abstract models. 16. Moe has a big exam tomorrow. He considered studying this evening, but decided to  go out with Curly instead. Since Moe always chooses rationally, it must be true that  A. the opportunity cost of studying tonight is less than the value Moe gets from spending  time with Curly. B. the opportunity cost of studying tonight is equal to the value Moe gets from spending  time with Curly minus the cost of earning a low grade on the exam. C. Moe gets more benefit from spending time with Curly than from studying. D. Moe gets less benefit from spending time with Curly than from studying. Use this to answer questions 17­20  Matt has decided to purchase his textbooks for the semester. His options are to purchase  the books via the Internet with next day delivery to his home at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last  week he drove to campus to buy a concert ticket because they offered 25 percent off the  regular price of $16. 17. Matt's benefit of buying his books at the bookstore is _____.  A. $5 B. $9 C. $170 D. $175 18. Matt's benefit was ____ from driving to campus to buy the concert ticket last week.  A. $2 B. $4 C. $9 D. $16 4 19. According to the cost­benefit principle:  A. it would not be rational for Matt to drive to campus to purchase the books because the  $5 saving is only two percent of the cost of the books, and that is much less than the 25  percent he saved on the concert ticket. B. it would be rational for Matt to drive to campus because it costs less to buy the books  there than via the Internet. C. it would be rational for Matt to drive to campus because the $5 saving is more than he  saved by driving there to buy the concert ticket. D. it would not be rational for Matt to drive to campus to purchase the books because the  cost of gas and his time must certainly be more than the $5 he would save. 20. Assume the minimum that Matt would be willing to accept to drive to the university  campus is equal to the amount he saved on the concert ticket. What would be the amount  of his economic surplus if he bought his textbooks at the university bookstore rather than  via the Internet?  A. $5 B. $1 C. $50 D. $20 5


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Jim McGreen Ohio University

"Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."


"Their 'Elite Notetakers' are making over $1,200/month in sales by creating high quality content that helps their classmates in a time of need."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.