Question 1

When a person makes a quick decision without taking the time to compare the opportunity cost of all possible options,he or she is using:

Accepted Answer

A) bounded rationality. 
B) risk aversion. 
C) loss aversion. 
D) the status quo. 
A) bounded rationality. 
B) risk aversion. 
C) loss aversion. 
D) the status quo.

Question 2

For which decision would marginal analysis be relevant?

Accepted Answer

A) spending $1,000 on a summer vacation or on painting your house 
B) deciding how much to spend on a summer vacation 
C) buying a new car or a second-hand car 
D) eating dinner at home or going out to a restaurant for dinner 
A) spending $1,000 on a summer vacation or on painting your house 
B) deciding how much to spend on a summer vacation 
C) buying a new car or a second-hand car 
D) eating dinner at home or going out to a restaurant for dinner

Question 3

The activities of consumers and firms:

Accepted Answer

A) have benefits but not costs. 
B) have costs but not benefits. 
C) have both costs and benefits. 
D) are too complex to be analyzed with economic theory. 
A) have benefits but not costs. 
B) have costs but not benefits. 
C) have both costs and benefits. 
D) are too complex to be analyzed with economic theory.

Question 4

Use the following to answer question:  
-(Table: TC's Pizza Parlor)Use Table: TC's Pizza Parlor.Assume that the marginal benefit is constant in intervals of production.Suppose five slices of pizza are being produced.What is the marginal benefit of producing one more slice of pizza?

Accepted Answer

A) $3 
B) $2 
C) $15 
D) $55 
A) $3 
B) $2 
C) $15 
D) $55

Question 5

In central Florida,the demand for real estate has been increasing rapidly for years.Therefore,the _____ cost of capital is _____ in central Florida's orange groves.

Accepted Answer

A) explicit;decreasing 
B) implicit;increasing 
C) implicit;decreasing 
D) explicit;increasing 
A) explicit;decreasing 
B) implicit;increasing 
C) implicit;decreasing 
D) explicit;increasing

Question 6

Star athletes,singers,and actors often start their career very young,forgoing a college education.This is an example of poor decision making since a college education provides benefits that will be invaluable later in their lives.

Accepted Answer

A) True 
 B)False

Question 7

If the marginal cost curve is upward sloping,as output increases,marginal costs will:

Accepted Answer

A) increase. 
B) decrease. 
C) stay constant. 
D) become downward sloping. 
A) increase. 
B) decrease. 
C) stay constant. 
D) become downward sloping.

Question 8

Which question BEST describes a "how much" decision?

Accepted Answer

A) Should I drive to work or ride my bicycle? 
B) Should I rent a movie or watch a baseball game on television? 
C) Should I attend graduate school or immediately enter the labor force? 
D) Should I buy a third hot dog? 
A) Should I drive to work or ride my bicycle? 
B) Should I rent a movie or watch a baseball game on television? 
C) Should I attend graduate school or immediately enter the labor force? 
D) Should I buy a third hot dog?

Question 9

Use the following to answer question:  
-(Figure: Marginal Benefits and Marginal Costs)Use Figure: Marginal Benefits and Marginal Costs.More time spent studying economics adds points to economics scores (MB)but subtracts points from accounting scores (MC).At 4 hours of study,Claudia will maximize her benefit from study time because:

Accepted Answer

A) MB > MC. 
B) MB = 20 and MC = 5. 
C) the difference between total benefits and total costs is maximized. 
D) sunk costs are minimized. 
A) MB > MC. 
B) MB = 20 and MC = 5. 
C) the difference between total benefits and total costs is maximized. 
D) sunk costs are minimized.

Question 10

Marginal benefit:

Accepted Answer

A) is the subsidiary benefit from an activity;for example,the main benefit from weight training is an increase in muscle mass,and the subsidiary or marginal benefit might be a reduction in cholesterol. 
B) is the addition to total benefit due to undertaking one more unit of an activity. 
C) must be increasing if total benefit is increasing. 
D) normally increases as more of an activity is undertaken. 
A) is the subsidiary benefit from an activity;for example,the main benefit from weight training is an increase in muscle mass,and the subsidiary or marginal benefit might be a reduction in cholesterol. 
B) is the addition to total benefit due to undertaking one more unit of an activity. 
C) must be increasing if total benefit is increasing. 
D) normally increases as more of an activity is undertaken.

Question 11

Which statement is an example of bounded rationality?

Accepted Answer

A) Ann proofreads her term paper six times. 
B) Mary feels that she has studied enough to make an A+ on her economics exam but studies another two hours just to be sure. 
C) Tim studies only an hour on the morning of his economics exam because he is satisfied just to make a passing grade. 
D) Terry does his economics homework twice to be sure that he has a thorough understanding of the topic. 
A) Ann proofreads her term paper six times. 
B) Mary feels that she has studied enough to make an A+ on her economics exam but studies another two hours just to be sure. 
C) Tim studies only an hour on the morning of his economics exam because he is satisfied just to make a passing grade. 
D) Terry does his economics homework twice to be sure that he has a thorough understanding of the topic.

Question 12

Use the following to answer question:  
-(Table: Expected Exam Scores from Studying Economics and Accounting)Use Table: Expected Exam Scores from Studying Economics and Accounting.If you studied for a total of 3 hours,your combined scores would be maximized by spending _____ hours studying accounting.

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
A) 0 
B) 1 
C) 2 
D) 3

Question 13

The implicit cost of capital is:

Accepted Answer

A) the explicit cost of capital that the firm might have used but didn't need to. 
B) depreciation. 
C) the opportunity cost of the capital used by a business. 
D) the cost of human capital. 
A) the explicit cost of capital that the firm might have used but didn't need to. 
B) depreciation. 
C) the opportunity cost of the capital used by a business. 
D) the cost of human capital.

Question 14

Use the following to answer question:  
-(Figure: Marginal Benefits and Marginal Costs)Use Figure: Marginal Benefits and Marginal Costs.More time spent studying economics adds points to economics scores (MB)but subtracts points from accounting scores (MC).When Claudia studies economics for four hours,the marginal benefit is _____ points;when she studies for 6 hours,the marginal benefit is _____ points.

Accepted Answer

A) 20;10 
B) 30;10 
C) 20;0 
D) 20;30 
A) 20;10 
B) 30;10 
C) 20;0 
D) 20;30

Question 15

Learning effects often result in _____ marginal costs.

Accepted Answer

A) decreasing 
B) increasing 
C) constant 
D) random 
A) decreasing 
B) increasing 
C) constant 
D) random

Question 16

The habit of mentally assigning dollars to different accounts so that some dollars are worth more than others is:

Accepted Answer

A) status quo bias. 
B) bounded rationality. 
C) loss aversion. 
D) mental accounting. 
A) status quo bias. 
B) bounded rationality. 
C) loss aversion. 
D) mental accounting.

Question 17

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

Accepted Answer

A) $8. 
B) $12. 
C) $45. 
D) $70. 
A) $8. 
B) $12. 
C) $45. 
D) $70.

Question 18

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

Accepted Answer

A) $17. 
B) $15. 
C) $13. 
D) $11. 
A) $17. 
B) $15. 
C) $13. 
D) $11.

Question 19

Use the following to answer question:  
-(Table: Expected Exam Scores from Studying Economics and Accounting)Use Table: Expected Exam Scores from Studying Economics and Accounting.If you studied for a total of 3 hours and divided your time to maximize your combined scores,you would expect your combined scores to be _____ points.

Accepted Answer

A) 145 
B) 150 
C) 155 
D) 165 
A) 145 
B) 150 
C) 155 
D) 165

Question 20

Suppose the Chicago Cubs could rent out Wrigley Field (the field they play on)to local youth leagues for $11,000 per month.The $11,000 per month is the _____ cost of capital.

Accepted Answer

A) implicit 
B) explicit 
C) direct 
D) total 
A) implicit 
B) explicit 
C) direct 
D) total

When a person makes a quick decision without taking the time to compare the opportunity cost of all possible options,he or she is using:

For which decision would marginal analysis be relevant?

The activities of consumers and firms:

Use the following to answer question: -(Table: TC's Pizza Parlor)Use Table: TC's Pizza Parlor.Assume that the marginal benefit is constant in intervals of production.Suppose five slices of pizza are being produced.What is the marginal benefit of producing one more slice of pizza?

In central Florida,the demand for real estate has been increasing rapidly for years.Therefore,the _ cost of capital is _ in central Florida's orange groves.

Star athletes,singers,and actors often start their career very young,forgoing a college education.This is an example of poor decision making since a college education provides benefits that will be invaluable later in their lives.

If the marginal cost curve is upward sloping,as output increases,marginal costs will:

Which question BEST describes a "how much" decision?

Marginal benefit:

Which statement is an example of bounded rationality?

Use the following to answer question: -(Table: Expected Exam Scores from Studying Economics and Accounting)Use Table: Expected Exam Scores from Studying Economics and Accounting.If you studied for a total of 3 hours,your combined scores would be maximized by spending _____ hours studying accounting.

The implicit cost of capital is:

Learning effects often result in _____ marginal costs.

The habit of mentally assigning dollars to different accounts so that some dollars are worth more than others is:

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

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

Suppose the Chicago Cubs could rent out Wrigley Field (the field they play on)to local youth leagues for $11,000 per month.The $11,000 per month is the _____ cost of capital.

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

Exam 9: Decision Making by Individuals and Firms

When a person makes a quick decision without taking the time to compare the opportunity cost of all possible options,he or she is using:

For which decision would marginal analysis be relevant?

The activities of consumers and firms:

Use the following to answer question: -(Table: TC's Pizza Parlor)Use Table: TC's Pizza Parlor.Assume that the marginal benefit is constant in intervals of production.Suppose five slices of pizza are being produced.What is the marginal benefit of producing one more slice of pizza?

In central Florida,the demand for real estate has been increasing rapidly for years.Therefore,the _____ cost of capital is _____ in central Florida's orange groves.

Star athletes,singers,and actors often start their career very young,forgoing a college education.This is an example of poor decision making since a college education provides benefits that will be invaluable later in their lives.

If the marginal cost curve is upward sloping,as output increases,marginal costs will:

Which question BEST describes a "how much" decision?

Marginal benefit:

Which statement is an example of bounded rationality?

The implicit cost of capital is:

Learning effects often result in _____ marginal costs.

The habit of mentally assigning dollars to different accounts so that some dollars are worth more than others is:

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

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

Suppose the Chicago Cubs could rent out Wrigley Field (the field they play on)to local youth leagues for $11,000 per month.The $11,000 per month is the _____ cost of capital.

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

In central Florida,the demand for real estate has been increasing rapidly for years.Therefore,the _ cost of capital is _ in central Florida's orange groves.