Practice Quiz

AP Microeconomics

Category - Microeconomics

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Fae is a nutritionist who typically charges her clients $150 per hour of nutritional consulting. Fae leaves her office early to buy her children some Christmas presents. Fae spends three hours at the mall and leaves with two stuffed animals that cost $25 each. How much did the gifts actually cost Fae?
  1. $50
  2. $450
  3. $500
  4. $$200
Explanation
Answer - C - These gifts actually cost Fae $500.

Key Takeaway: Whenever an economist is figuring out these scenarios, it is always necessary to include the opportunity cost of a good. For Fae, it is necessary to add in the regular wage (3 hours, multiplied by $150 per hour) to the cost of the stuffed animals (2 toys, multiplied by $25 each). The total is $500.
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