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1. Opportunity cost In addition to direct money costs, what were two of the opportunity costs that affected your decision to study at LCC? (Please answer briefly.) 2. “People make choices based on expected costs and benefits”. (Please answer briefly.) a. What were some of the expected benefits that led you to choose to study at LCC? b. How has the Covid-19 pandemic changed some of the expected costs and benefits of your choice? 3. "Time is money" (opportunity cost): If you value your time at €8 per hour, would you prefer to fly to LCC in 2 hours for €100, or take a train to LCC in 10 hours for €20? Explain your answer, using the numbers. 4. Julija can read either 40 pages of economics or 20 pages of psychology in an hour. When studying, what is Julija's opportunity cost for reading each page of economics? Explain. 5. “Everyone should receive the best possible health care, no matter what the expense.' Which of the seven principles of economics does this recommendation neglect to consider? Explain. 6. “Unemployed people should receive benefits replacing their full salary (at their previous job) until they find another job.” Which of the seven principles does this recommendation neglect to consider? Explain. 7. In the circular-flow diagrams, does each of the following transactions take place in a product market or in a factor market? Which direction does the product or factor flow (between firms and households)? Which direction does the payment flow? a. Sam pays a storekeeper €2 for a liter of milk. b. Sally earns €4 per hour working at a restaurant. c. Susan spends €6 to see a film at the cinema. d. Stuart receives $10,000 in dividends from his shares in Microsoft corporation. 8. One common assumption in economics is that the products of different firms in the same industry are indistinguishable. a. Is this a reasonable assumption for restaurant meals? Explain your answer. b. Is this a reasonable assumption for "commodity” products like copper or gold? Explain your answer.
1. Two possible opportunity costs
(i) Salary/wage from work forgone in order to join LCC.
(ii) Expected gains from investing the tuition fees into self business and monetary cost of an entrepreneurship experience.
2. (a) Expected Benefits - College Placements, Exposure, Excellent Faculty, Comprehensive Course structure etc.
(b) Impact of pandemic on benefits and cost - In the absence of campus experience, interaction and exposure has reduced, job market is an a slump hence placements might be impacted, Internet and IT asset Cost have increased due to online classes.Online classes have compromised teaching quality.
3. Option 1 : Total cost = Explicit Cost + Cost of time = 100 + 2*8 = 116
Option 2 : Total Cost = 20 + 10*8 = 100
Since, cost of option 2 is less than that of 1, I will prefer to take a train to LCC in 10 hours at euro 20.
4. 40 pages of economics or 20 pages of psychology
it means reading 40 pages of economics in one hour is equivalent to reading 20 pages of psychology
reading 1 page of economics is equivalent to reading 20/40 = 1/2 pages of psychology.
Hence, Julija's oopportunity cost while reading each page of economics is 1/2 page of psychology.
5. The principle of "Cost vs Benefits" is being ignored, as cost of providing best healthcare is not being accounted for in the proposition.
6. "Incentives matter" principle is being ignored as if the unemployed person is getting full salary then he might have little incentive to look for another job.
