econ1101 questions (1 Viewer)

[jessicahung]

So.. I'm stuck in these questions.

1. Your classmates from the University of New South Wales are planning to go to the Gold Coast for the break and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have frequent-flyer points worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Melbourne two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. If the Sydney–Melbourne round-trip airfares is $350, should you go to the Gold Coast?
I'm thinking the benefits of the trip = 1400 and the costs = (600-500)+900+350 and therefore an economic surplus of 50 (1400-1350). But the answer is saying I should go because of the surplus of 150 not 50.

2. You paid $35 for a ticket (which is non-refundable) to see JAM, a local rock band, in concert on Saturday. It turns out that $35 is also the exact value you place on attending the concert. Your boss called and she is looking for someone to cover a shift on Saturday at the same time as your concert. You will have to work four hours and she will pay you time-and-a-half, which is $9/hr. What is your economic surplus of going to work on Saturday?
Here, I'm thinking (9x4x1.5)-35 = 19 but again the answer is saying it should be an economic surplus of 1.

3. Sean studied for five hours for his first Economics test and his test score was 85; six hours for his second Economics test and scored 90; and seven hours for his third Economics test and scored 95. He also studied five hours for his first Maths test and his test score was 68; six hours for his second Maths test and scored 78; and seven hours for his third Maths test and scored 88. The average benefit per hour spent studying for the Economics tests was ____________ and the average benefit per hour spent studying for the Maths tests was ____________.
Have no idea... the answers are 15 and 13 respectively.

Anyone help?

 

[NBGHHS]

For that first question
The benefit = $1400
The costs = $1250 ($350 opportunity cost of going to gold coast + $900 for other costs of vacation to gold coast)
So, according to cost-benefit principle, we should take a choice that yields a result in which benefits are higher that costs.
So 1400-1250 = $150 surplus - they should go to gold coast.

 

[jessicahung]

For that first question
The benefit = $1400
The costs = $1250 ($350 opportunity cost of going to gold coast + $900 for other costs of vacation to gold coast)
So, according to cost-benefit principle, we should take a choice that yields a result in which benefits are higher that costs.
So 1400-1250 = $150 surplus - they should go to gold coast.

What about that additional 100 bucks I've to pay? - the frequent flyer points worth only 500 but the airfares are 600.

 

[NBGHHS]

What about that additional 100 bucks I've to pay? - the frequent flyer points worth only 500 but the airfares are 600.

My assumption with this sort of question is that, once you choose to use the frequent flier points, the airline ticket itself becomes a sunk cost

 

[jessicahung]

My assumption with this sort of question is that, once you choose to use the frequent flier points, the airline ticket itself becomes a sunk cost

Oic. Thank you

 

[danielau]

You have misread the question. Time and a half is $9. There is no need to multiple it by 1.5. So from this, 9$/hour x 4 hours worked = $36. The cost of the JAM is $35, so $36 - $35 is an economic surplus of a dollar.

 

[jessicahung]

You have misread the question. Time and a half is $9. There is no need to multiple it by 1.5. So from this, 9$/hour x 4 hours worked = $36. The cost of the JAM is $35, so $36 - $35 is an economic surplus of a dollar.

So that's why... I totally thought $9 was the original pay.

Thank you