Q: A student is choosing between two apartments. Apartment X costs $$1,000/month and is 5 hours/month farther from campus than Apartment Y, which costs 1$$,150/month. If the student values their time at $20/hour, what is the total cost of Apartment X?

$$1,000 + (5 \times 20) = 1,100$$

Question 1

Which of the following best describes optimization in economics?

Accepted Answer

Selecting the best feasible option by comparing total value or marginal changes.

Question 2

Suppose you are deciding between two apartments. Apartment A costs $$1,200/month and is 10 hours/month farther from work than Apartment B, which costs 1$$,350/month. If your opportunity cost of time is $15/hour, which apartment has the lower total cost?

Accepted Answer

Apartment A, with a total cost of $$1,350 (1$$,200 + $150).

Question 3

What is the formula for marginal net benefit (MNB) when moving between two alternatives?

Accepted Answer

$$MNB = MB - MC$$

Question 4

If the opportunity cost of time increases from $$10/hour to 15/$$hour, what happens to the total cost of apartments with longer commutes?

Accepted Answer

Total cost increases for apartments with longer commutes.

Question 5

Which statement about optimization using total value and marginal analysis is correct?

Accepted Answer

Both methods give identical answers when applied correctly.

Question 6

You are choosing between two apartments: East ($$950/month, great view valued at 25/$$month) and West ($950/month, no view). What is the net benefit of choosing East over West?

Accepted Answer

$$Net\ Benefit = 950 + 25 - 950 = 25$$

Question 7

If moving from West to East apartment increases your benefit by $$25 but also increases your commuting cost by 40$$, what is the marginal net benefit?

Accepted Answer

$$MNB = 25 - 40 = -15$$

Question 8

Which of the following is NOT a reason why it may be difficult to make the best choice in optimization?

Accepted Answer

Having perfect information about all options.

Question 9

In the context of apartment selection, what is the opportunity cost of time?

Accepted Answer

The value of time spent commuting, calculated as hours multiplied by hourly wage.

Question 10

Suppose you value your time at $20/hour and spend 2 extra hours commuting per month in Apartment A compared to Apartment B. What is the additional commuting cost for Apartment A?

Accepted Answer

$$2 	imes 20 = 40$$

Question 11

Which principle describes the optimal feasible alternative in marginal analysis?

Accepted Answer

The optimum is the alternative where moving away makes you worse off and moving toward it makes you better off.

Question 12

If the rent for apartments decreases as distance from the city center increases, what economic concept does this illustrate?

Accepted Answer

Inverse relationship between location desirability and price.

Question 13

Which equation correctly represents the marginal cost (MC) of moving between two alternatives?

Accepted Answer

$$MC = \Delta Costs$$

Question 14

A student is choosing between two apartments. Apartment X costs $$1,000/month and is 5 hours/month farther from campus than Apartment Y, which costs 1$$,150/month. If the student values their time at $20/hour, what is the total cost of Apartment X?

Accepted Answer

$$1,000 + (5 	imes 20) = 1,100$$

Question 15

Which of the following is a step in optimization using total value?

Accepted Answer

Translate all costs and benefits into common units.

Question 16

If you receive a raise and your opportunity cost of time increases, how does this affect your apartment choice if commute times differ?

Accepted Answer

You are less likely to choose an apartment with a longer commute.

Question 17

Which of the following best describes marginal analysis?

Accepted Answer

It focuses on the change in net benefit when moving between alternatives.

Question 18

If the marginal net benefit (MNB) of moving from Apartment A to Apartment B is negative, what should you do?

Accepted Answer

Stay in Apartment A.

Question 19

Which of the following is NOT a component of total cost when choosing an apartment?

Accepted Answer

The color of the apartment walls.

Question 20

Suppose you fly for work twice a month, and each trip saves you 30 minutes if you live in Apartment West instead of East. If you value your time at $20/hour, what is the monthly time savings in dollars?

Accepted Answer

$$4 	imes 0.5 	imes 20 = 40$$

Optimization in Microeconomics: Choosing the Best Feasible Option

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