Exam 9: Decision Making by Individuals Firms

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:

In economics, maximization of the total profit of an activity occurs when:

Firms will continue to produce if:

Because resources are scarce, the true cost of anything is its opportunity cost.

You can buy slices of pizza at $2.50 each, and you have drawn up a table that summarizes your total cost and total benefit of purchasing up to five slices of pizza. A coworker, looking over your shoulder, says that you should consume five slices of pizza because the total benefit you receive is greatest at that quantity. How do you respond? Is there any situation in which your coworker might be correct?

Bessie wants to calculate the accounting and economic profits of her cattle farm in Nebraska. She pays $30,000 per year in overhead, $80,000 in wages, and $20,000 in insurance. She forgoes $30,000 per year that she could make as a teacher. If her total revenue equals $140,000, that means her accounting profit is _____ and her economic profit is _____.

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

Use the following to answer question: -(Table: Slices of Pizza) Look at the table Slices of Pizza. Complete the table and determine how many slices you should eat.

An "either-or" decision entails:

Use the following to answer questions: Figure: Marginal Benefits and Marginal Costs -(Figure: Marginal Benefits and Marginal Costs) Look at the figure Marginal Benefits and Marginal Costs. More time spent studying economics adds points to economics scores (MB) but subtracts points from accounting scores (MC). The marginal benefit of studying economics for four hours is _____ points, and the marginal cost is _____ points.

Use the following to answer question: -(Table: The Cost of Producing Gadgets) Look at the table The Cost of Producing Gadgets. According to this table, the marginal cost is:

Use the following to answer questions: Figure: Marginal Benefits and Marginal Costs -(Figure: Marginal Benefits and Marginal Costs) Look at the 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 four hours of study, Claudia will maximize her benefit from study time because:

Use the following to answer questions: -(Table: Marginal and Total Benefit) Look at the table Marginal and Total Benefit. Sed is deciding how many football games he wants to attend this year. If tickets to each football game cost $10, then he should attend _____ game(s).

Profit is the difference between _____ and _____.

You have rented your first apartment, signing a lease that commits you to pay $500 each month for 12 months. You have an opportunity to take a trip to Europe during the entire month of June, and you will spend $2,000 traveling. Your apartment will be vacant, but because of your lease, you must still pay the rent. The cost of taking the trip to Europe is:

Use the following to answer questions: Figure: The Marginal Cost Curve -(Figure: The Marginal Cost Curve) Look at the figure The Marginal Cost Curve. The total cost of mowing four lawns is approximately:

Sally must submit a form to enroll in her company's flexible medical benefits program. Although she has been employed over a year, she has yet to complete the form. Which type of irrational behavior does this represent?

Use the following to answer questions: Figure: The Marginal Cost Curve -(Figure: The Marginal Cost Curve) Look at the figure The Marginal Cost Curve. The total cost of mowing five lawns is approximately:

In economic analysis, at the optimal quantity of an activity:

Use the following to answer questions: -(Table: TC's Pizza Parlor) Look at the table TC's Pizza Parlor and assume that marginal cost is constant in the intervals of production. The marginal cost for pizza production: