A firm pays Pam $40 per hour to assemble personal computers. Each day, Pam can assemble 4 computers if she works 1 hour, 7 computers if she works 2 hours, 9 computers if she works 3 hours, and 10 computers if she works 4 hours. Pam cannot work more than 4 hours day. Each computer consists of a motherboard, a hard drive, a case, a monitor, a keyboard, and a mouse. The total cost of these parts is $600 per computer. If the firm sells each computer for $650, then how many hours a day should the firm employ Pam to maximize its net benefit from her employment? 1 hour 2 hours 3 hours 4 hours 94. If Jane for 6 hours she can rent out 9 apartments, and if she works for 7 hours she can rent out 12 apartments. The marginal benefit of Jane's 7th hour of work equals: 12 apartments 9 apartments 3 apartments 1 apartment The following table shows the relationship between the speed of a computer's CPU and its benefits and costs. Assume that all other features of the computer are the same (that is, CPU speed is the only source of variation), and only the CPU speeds listed below are available for purchase. The marginal benefit of upgrading from a 2.0GHz computer to a 2.5GHz computer is: $1,400. $1,000. $400.
117. The Incentive Principle states that a person: A. is more likely to take an action if its cost increases. B. is more likely to take an action if its benefit increases. should take an action if its cost increases. should take an action if its benefit increases. The Incentive Principle states that a person is more likely to take an action if its benefit rises, and less likely to do something if its cost rises. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 01 Easy Learning Objective: Explain and apply the Incentive Principle; which says that if you want to predict people's behavior; a good place to start is by examining their incentives. Topic: Normative Economics Versus Positive Economics 118. The Incentive Principle is an example of: an economic pitfall. the benefits of an action. a positive economic principle. a normative economic principle. The Incentive Principle predicts how people will behave. The Principle states how they should behave. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Remember Difficulty: 01 Easy Learning Objective: Explain and apply the Incentive Principle; which says that if you want to predict people's behavior; a good place to start is by examining their incentives. Normative Economics Versus Positive Economics 119. According to the Incentive Principle, people will be less likely to smoke if the government: A. increases taxes on devices such as nicotine patches. B. increases taxes on cigarettes, effectively raising the price. subsidizes hospitals treating lung disease. invests more money in cancer research. The Incentive Principle states that a person is more likely to take an action if its benefit rises, and less likely to do something if its cost rises. AACSB: Reflective Thinking Accessibility: Keyboard Navigation Blooms: Understand Difficulty: 02 Medium Learning Objective: Explain and apply the Incentive Principle; which says that if you want to predict people's behavior; a good place to start is by examining their incentives. Topic: Normative Economics Versus Positive Economics