Assignment 1
Department of Economics, School of Business and Management American University of Sharjah Principles of Macroeconomics
Practice Assignment 1 (chapters 1 &2)
Instructor: Dr. Javed Younas
Name: ___________________________________
AUS e-mail id: ________________
1. Amira is thinking about going to the movies tonight. A ticket costs $7 and she will have to cancel her baby-sitting job that pays $30. The cost of seeing the movie is: a. $7 b. $30 c. $37 d. $37 minus the benefit of seeing the movie. 2. Alaa received a four-year scholarship to attend a university that covered tuition and fees, room and board, and books and supplies. As a result a. attending the university for four years is costless for Alaa. b. Alaa has no incentive to work hard while at the university. c. the cost of attending the university is the amount of money Alaa could have earned working for four years. d. the cost of attending the university is the sum of the benefits Alaa would have had attending each of the four other schools to which Alaa had been admitted 3. If the government wanted to use the incentive principle to discourage smoking, it would: a. b. c. d. publicize the health risks associated with second-hand smoke. increase taxes on cigarettes, raising the price of a pack. subsidize hospitals for treating lung disease. invest more money in health research.
Table 1
You own a pizza shop called "Pizza's' Us". Currently you are paying your cooks an hourly wage of $20. You sell a medium pizza for $10 a pie. By hiring more cooks, you can increase your pizza production as shown in the following table. 4. a. b. c. d. 5. a. b. c. d. Refer to Table 1. If you operate one hour every day what is the marginal cost of the 3rd cook? 10$ 20$ 40$ 60$ Refer to Table 1. How many cooks should you hire to maximize your net benefit? 1 3 4 5
6. Mike has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800 once the repairs are complete. Mike discovers that, in addition
Practice Assignment 1 (chapters 1 &2)
Instructor: Dr. Javed Younas
Name: ___________________________________
AUS e-mail id: ________________
1. Amira is thinking about going to the movies tonight. A ticket costs $7 and she will have to cancel her baby-sitting job that pays $30. The cost of seeing the movie is: a. $7 b. $30 c. $37 d. $37 minus the benefit of seeing the movie. 2. Alaa received a four-year scholarship to attend a university that covered tuition and fees, room and board, and books and supplies. As a result a. attending the university for four years is costless for Alaa. b. Alaa has no incentive to work hard while at the university. c. the cost of attending the university is the amount of money Alaa could have earned working for four years. d. the cost of attending the university is the sum of the benefits Alaa would have had attending each of the four other schools to which Alaa had been admitted 3. If the government wanted to use the incentive principle to discourage smoking, it would: a. b. c. d. publicize the health risks associated with second-hand smoke. increase taxes on cigarettes, raising the price of a pack. subsidize hospitals for treating lung disease. invest more money in health research.
Table 1
You own a pizza shop called "Pizza's' Us". Currently you are paying your cooks an hourly wage of $20. You sell a medium pizza for $10 a pie. By hiring more cooks, you can increase your pizza production as shown in the following table. 4. a. b. c. d. 5. a. b. c. d. Refer to Table 1. If you operate one hour every day what is the marginal cost of the 3rd cook? 10$ 20$ 40$ 60$ Refer to Table 1. How many cooks should you hire to maximize your net benefit? 1 3 4 5
6. Mike has spent $500 purchasing and repairing an old fishing boat, which he expects to sell for $800 once the repairs are complete. Mike discovers that, in addition