Question 1

Part of the explicit cost of owning a restaurant is rent paid for the kitchen equipment.

Accepted Answer

A) True 
 B)False

Question 2

Use the following to answer question:  
-(Table: Marginal Benefit of Sweatshirts)Use Table: Marginal Benefit of Sweatshirts.The marginal benefit of producing the fourth sweatshirt is:

Accepted Answer

A) $58. 
B) $14. 
C) $13. 
D) $12. 
A) $58. 
B) $14. 
C) $13. 
D) $12.

Question 3

Use the following to answer question:  
-(Table: Tutoring)Use Table: Tutoring.If the college requires all tutors to register with the dean and charges each tutor $10 to register and if Sigmund can charge all students their willingness to pay,his total profit from tutoring will be:

Accepted Answer

A) $10. 
B) $20. 
C) $30. 
D) $40. 
A) $10. 
B) $20. 
C) $30. 
D) $40.

Question 4

For MOST firms,economic profit is:

Accepted Answer

A) less than accounting profit. 
B) equal to accounting profit. 
C) greater than accounting profit. 
D) negative. 
A) less than accounting profit. 
B) equal to accounting profit. 
C) greater than accounting profit. 
D) negative.

Question 5

A decision maker who is irrational:

Accepted Answer

A) chooses an option that makes him or her worse off,rather than choosing another available option. 
B) chooses the option that makes him or her better off,rather than choosing another available option. 
C) allocates income to maximize his or her satisfaction from consuming goods and services. 
D) seeks to maximize business profit. 
A) chooses an option that makes him or her worse off,rather than choosing another available option. 
B) chooses the option that makes him or her better off,rather than choosing another available option. 
C) allocates income to maximize his or her satisfaction from consuming goods and services. 
D) seeks to maximize business profit.

Question 6

Wendy sells ice-making machines.She can sell six per week at a price of $2,000 per machine.If she charges $2,100 per machine,she will sell only five per week.The marginal benefit of selling the sixth ice-making machine is:

Accepted Answer

A) $2,000. 
B) $2,100. 
C) $12,000. 
D) $1,500. 
A) $2,000. 
B) $2,100. 
C) $12,000. 
D) $1,500.

Question 7

Use the following to answer question:  
-(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of the fourth sweatshirt is:

Accepted Answer

A) $9. 
B) $20. 
C) $24. 
D) $15. 
A) $9. 
B) $20. 
C) $24. 
D) $15.

Question 8

The decision to tip a server is a(n):

Accepted Answer

A) rational decision if the person leaving the tip is concerned about fairness. 
B) irrational economic decision because it reduces the economic payoff of the tipper. 
C) example of decision making using bounded rationality. 
D) example of behavior based on risk aversion. 
A) rational decision if the person leaving the tip is concerned about fairness. 
B) irrational economic decision because it reduces the economic payoff of the tipper. 
C) example of decision making using bounded rationality. 
D) example of behavior based on risk aversion.

Question 9

Pauli's Pizza offers one slice for $2,two slices for $3.50,three slices for $4.50,and four slices for $5.00.Sal orders two slices.From this we know that Sal's marginal benefit from the second slice must be at least _____ and the marginal benefit from the third slice must be less than _____.

Accepted Answer

A) $3.50;$4.50 
B) $3.50;$1.00 
C) $1.50;$1.00 
D) $1.50;$4.50 
A) $3.50;$4.50 
B) $3.50;$1.00 
C) $1.50;$1.00 
D) $1.50;$4.50

Question 10

Use the following to answer question:  
-(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of the second sweatshirt is:

Accepted Answer

A) $9. 
B) $20. 
C) $11. 
D) $29. 
A) $9. 
B) $20. 
C) $11. 
D) $29.

Question 11

Accountants use only _____ costs in their computations.

Accepted Answer

A) opportunity 
B) implicit 
C) explicit 
D) variable 
A) opportunity 
B) implicit 
C) explicit 
D) variable

Question 12

People are willing to buy insurance because of:

Accepted Answer

A) risk aversion. 
B) the status quo. 
C) the miscalculation of opportunity costs. 
D) bounded rationality. 
A) risk aversion. 
B) the status quo. 
C) the miscalculation of opportunity costs. 
D) bounded rationality.

Question 13

(Scenario: Betty's Cookie Shop)Use Scenario: Betty's Cookie Shop.Betty's implicit and explicit costs are equal to: Scenario: Betty's Cookie Shop
Betty runs a cookie shop where she sells cookies for $1 each.She employs five people,each of whom worked a total of 500 hours last year;she paid them $10 per hour.Her costs of equipment and raw materials add up to $75,000.Her business ability is legendary,and other companies have offered to pay Betty $100,000 to come to work for them.She also knows she could sell her cookie shop for $150,000.The bank in town pays an annual interest rate of 3% on all funds deposited with it.

Accepted Answer

A) $80,000. 
B) $184,500. 
C) $204,500. 
D) $100,000. 
A) $80,000. 
B) $184,500. 
C) $204,500. 
D) $100,000.

Question 14

Most economic models:

Accepted Answer

A) assume that people behave irrationally. 
B) assume that people behave rationally. 
C) assume that people are reluctant to learn from their mistakes. 
D) are useless because they use too many simplifying assumptions. 
A) assume that people behave irrationally. 
B) assume that people behave rationally. 
C) assume that people are reluctant to learn from their mistakes. 
D) are useless because they use too many simplifying assumptions.

Question 15

An "either-or" decision is a choice between two activities.

Accepted Answer

A) True 
 B)False

Question 16

Use the following to answer question:  
-(Table: Marginal Analysis of Sweatshirt Production II)Use Table: Marginal Analysis of Sweatshirt Production II.The profit at the optimal quantity of sweatshirts is:

Accepted Answer

A) $15. 
B) $16. 
C) $48. 
D) $80. 
A) $15. 
B) $16. 
C) $48. 
D) $80.

Question 17

If at a given quantity _____,the decision maker should do _____ of the activity.

Accepted Answer

A) MB  MC;less 
D) MB > MC;none 
A) MB  MC;less 
D) MB > MC;none

Question 18

Accounting profit takes into account explicit costs,but economic profit does not.

Accepted Answer

A) True 
 B)False

Question 19

Firms will continue to produce if:

Accepted Answer

A) the marginal benefits of producing an additional unit are greater than the marginal costs of producing that unit. 
B) the marginal benefits of producing an additional unit are less than the marginal costs of producing that unit. 
C) the marginal benefit of producing an additional unit is equal to the marginal cost of producing that unit. 
D) the costs of producing the unit stay constant. 
A) the marginal benefits of producing an additional unit are greater than the marginal costs of producing that unit. 
B) the marginal benefits of producing an additional unit are less than the marginal costs of producing that unit. 
C) the marginal benefit of producing an additional unit is equal to the marginal cost of producing that unit. 
D) the costs of producing the unit stay constant.

Question 20

If marginal costs of production are greater than marginal benefits of production:

Accepted Answer

A) costs will eventually decrease. 
B) too much of the good is being produced. 
C) more of the good should be produced. 
D) not all costs are being considered. 
A) costs will eventually decrease. 
B) too much of the good is being produced. 
C) more of the good should be produced. 
D) not all costs are being considered.

Exam 9: Decision Making by Individuals and Firms

Part of the explicit cost of owning a restaurant is rent paid for the kitchen equipment.

Use the following to answer question: -(Table: Marginal Benefit of Sweatshirts)Use Table: Marginal Benefit of Sweatshirts.The marginal benefit of producing the fourth sweatshirt is:

Use the following to answer question: -(Table: Tutoring)Use Table: Tutoring.If the college requires all tutors to register with the dean and charges each tutor $10 to register and if Sigmund can charge all students their willingness to pay,his total profit from tutoring will be:

For MOST firms,economic profit is:

A decision maker who is irrational:

Wendy sells ice-making machines.She can sell six per week at a price of $2,000 per machine.If she charges $2,100 per machine,she will sell only five per week.The marginal benefit of selling the sixth ice-making machine is:

Use the following to answer question: -(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of the fourth sweatshirt is:

The decision to tip a server is a(n):

Pauli's Pizza offers one slice for $2,two slices for $3.50,three slices for $4.50,and four slices for $5.00.Sal orders two slices.From this we know that Sal's marginal benefit from the second slice must be at least _____ and the marginal benefit from the third slice must be less than _____.

Use the following to answer question: -(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of the second sweatshirt is:

Accountants use only _____ costs in their computations.

People are willing to buy insurance because of:

Most economic models:

An "either-or" decision is a choice between two activities.

Use the following to answer question: -(Table: Marginal Analysis of Sweatshirt Production II)Use Table: Marginal Analysis of Sweatshirt Production II.The profit at the optimal quantity of sweatshirts is:

If at a given quantity _____,the decision maker should do _____ of the activity.

Accounting profit takes into account explicit costs,but economic profit does not.

Firms will continue to produce if:

If marginal costs of production are greater than marginal benefits of production:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Elasticity

Taxes

International Trade

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Pauli's Pizza offers one slice for $2,two slices for $3.50,three slices for $4.50,and four slices for $5.00.Sal orders two slices.From this we know that Sal's marginal benefit from the second slice must be at least _ and the marginal benefit from the third slice must be less than _.

If at a given quantity _,the decision maker should do _ of the activity.