Assume That for Indy,one Hour of Study Time in Economics

question 18

Multiple Choice

Assume that for Indy,one hour of study time in economics is perfectly substitutable for an hour of study time in calculus.Indy has exams in both subjects tomorrow and he determines that if spends all of his time studying economics,he will receive scores of 96 on his economics exam and 45 on his calculus exam.If he studies only calculus,his econ score will be 81 and his calculus score 90.Based on this information and assuming that Indy has no better alternative use of his time,what is the opportunity cost of improving his econ score by one (1) point?

• A) 1 point on his calculus exam.
• B) 1/3 point on his calculus exam.
• C) 3 points on his calculus exam.
• D) The opportunity cost cannot be determined with the information given.

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Definitions:

Price

The amount of money required to purchase a good or service, reflecting its value in the marketplace.

Deadweight Loss

A loss of economic efficiency that can occur when the equilibrium for a good or a service is not achieved or is not achievable.

Perfectly Competitive

A market structure characterized by many buyers and sellers, homogeneous products, and free entry and exit from the market.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually pay.