Lecture Exercise #1Spring 2022You will work on these exercises during class on Wednesday, January 12th. You are strongly encouraged to work with 3 or 4 of your peers, where you will discuss and work through the problems together. The instructional team will circulate between groups to answer your questions and provide guidance. Post your answers on Poll Everywhere (PE) using the link provided by Professor Balaban. Note that the PE link will be opened on command during class and will close with 15-20 minutes left in class. A warning will be given a few minutes before the link is closed. We will review the answers after the link isclosed.Honor Code Notice: You are not permitted to upload any content from this course to the web in any form, including but not limited to Chegg, Course Hero, Coursera, Google Drive, etc. If you post my coursecontent, you may be violating my intellectual property rights. In utilizing web sources to upload or download course content, you risk violating the University’s Honor Code.1. Mallory decides to spend three hours working overtime rather than watching a video with her friends. She earns $8 an hour. Her opportunity cost of working isa. the $24 she earns working.b. the $24 minus the enjoyment she would have received from watching the video.c. the enjoyment she would have received had she watched the video.d. nothing, since she would have received less than $24 of enjoyment from the video.2. Maurice receives $100 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally, he decides on Option B. The opportunity cost of this decision isa. the value to Maurice of the option he would have chosen had Option B not been available.b. the value to Maurice of Options A, C and D combined.c. $100.d. $300.3. Curly Joe often misses class. On Tuesday, Prof. Plum asked Curly Joe why he came to class today. Curly Joe said it was because he didn't have anything better to do. Prof Plum shoulda. tell Curly Joe to drop the bad attitude.b. report Curly Joe to the Dean of Students for disrupting class.c. give Curly Joe an A for participation because he clearly understands the concept of opportunity cost.d. give Curly Joe an F for participation because he doesn't understand the concept of opportunity cost.4. Rich, a student at State, is enrolled in 15 credit hours this semester. His grade in the Physics class is a passing grade, but below his expectations. Fearing that his grade may slip into the failing range, he is considering withdrawing from the course. He tells a friend, "I would drop the course, but I don't want to waste the $600 I paid in tuition for the course." His friend replies, "The $600 tuition you paid for the course is irrelevant to your decision. Your grade in the course is the only thing that is important, now." The friend isa. incorrect, because the tuition will have to be paid again when Jim retakes the course.b. correct, because the tuition is a marginal cost that should never be considered when making decisions.c. incorrect, because the tuition is an average cost and average costs should always be considered when making decisions.d. correct, because the tuition is a sunk cost and sunk costs should not be considered whenmaking decisions.5. You are considering staying in college another semester so that you can complete a major in economics. In deciding whether or not to stay you shoulda. compare the total cost of your education to the total benefits of your education.b. compare the total cost of your education to the benefits of staying one more semester.c. compare the cost of staying one more semester to the benefits of staying one more semester.d. compare the total benefits of your education to the cost of staying one more semester.6. Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $5800. Bill discovers that he needs to do an additional $2400 of work to make the car worth $5800 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?a. He should complete the additional work and sell the car for $5800.b. He should sell the car now for $3800.c. It does not matter which action he takes since the outcome will be the same either
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