Question 1

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

Accepted Answer

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

Question 2

Some highways have one lane; others have two, three, or more. If each lane costs $10 million per mile, an economist assumes that the total benefit of a three-lane highway must be _____ million per mile.

Accepted Answer

A)  less than $10 
B)  $10 to $20 
C)  $20 to $30 
D)  $30 or more 
A)  less than $10 
B)  $10 to $20 
C)  $20 to $30 
D)  $30 or more

Question 3

If a star college quarterback turns down a multimillion-dollar offer from the NFL to return for his senior year of college, he may be exhibiting:

Accepted Answer

A)  status quo bias. 
B)  mental accounting. 
C)  misperception of opportunity costs. 
D)  risk aversion. 
A)  status quo bias. 
B)  mental accounting. 
C)  misperception of opportunity costs. 
D)  risk aversion.

Question 4

The _____ benefit is the amount by which an additional unit of an activity increases its total benefit.

Accepted Answer

A)  average 
B)  net 
C)  marginal 
D)  top 
A)  average 
B)  net 
C)  marginal 
D)  top

Question 5

Which of the following 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 6

You own a small deli that sells sandwiches, salads, and soup. Which of the following is an implicit cost of the business?

Accepted Answer

A)  wages paid to part-time employees 
B)  the job offer you did not accept at a local catering service 
C)  bread, meat, and vegetables used to produce the items on your menu 
D)  your monthly utility bill 
A)  wages paid to part-time employees 
B)  the job offer you did not accept at a local catering service 
C)  bread, meat, and vegetables used to produce the items on your menu 
D)  your monthly utility bill

Question 7

Sara spends $25 for an all-day ticket to an amusement park. After one ride, it begins to rain and she wishes she had never come. Since she has already paid for her ticket, she should stay at the amusement park until it closes or she has wasted her $25.

Accepted Answer

A) True 
 B)False

Question 8

One of Jessuina's New Year's resolutions was to exercise more, so she bought an annual membership to the gym that allows unlimited visits. Unfortunately, the gym is so crowded and noisy that Jessuina leaves every day with a headache, without working out at all. According to marginal analysis, Jessuina should:

Accepted Answer

A)  continue using the gym for the year, since she has already paid for the membership. 
B)  join another gym only if a membership is cheaper at the new gym. 
C)  join another gym only if she can get a refund on her current membership. 
D)  stop using the gym. 
A)  continue using the gym for the year, since she has already paid for the membership. 
B)  join another gym only if a membership is cheaper at the new gym. 
C)  join another gym only if she can get a refund on her current membership. 
D)  stop using the gym.

Question 9

Sunk costs:

Accepted Answer

A)  are not considered in marginal analysis. 
B)  help to determine the optimal quantity of an activity. 
C)  can dramatically increase marginal costs. 
D)  are the same as variable costs. 
A)  are not considered in marginal analysis. 
B)  help to determine the optimal quantity of an activity. 
C)  can dramatically increase marginal costs. 
D)  are the same as variable costs.

Question 10

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

Accepted Answer

A)  zero 
B)  one 
C)  two 
D)  three 
A)  zero 
B)  one 
C)  two 
D)  three

Question 11

Which of the following is an "either-or" decision?

Accepted Answer

A)  Allen must decide how many courses to take this semester. 
B)  Sally must decide how many hours to spend studying for each of the four courses that she is taking this semester. 
C)  Chris must decide how many hours to work each week at his part-time job. 
D)  Dylan must decide whether to major in economics or finance. 
A)  Allen must decide how many courses to take this semester. 
B)  Sally must decide how many hours to spend studying for each of the four courses that she is taking this semester. 
C)  Chris must decide how many hours to work each week at his part-time job. 
D)  Dylan must decide whether to major in economics or finance.

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Since they have already paid for their tickets, it does not make economic sense for fans to leave before a game is finished.

Accepted Answer

A) True 
 B)False

Question 14

If the accounting profit for a firm is negative:

Accepted Answer

A)  the economic profit must be positive. 
B)  the economic profit must be negative. 
C)  the firm should produce more. 
D)  the firm will not owe any taxes. 
A)  the economic profit must be positive. 
B)  the economic profit must be negative. 
C)  the firm should produce more. 
D)  the firm will not owe any taxes.

Question 15

In economics, a marginal value refers to:

Accepted Answer

A)  the value associated with an unimportant, or marginal, activity. 
B)  a value entered as an explanatory item in the margin of a balance sheet or other accounts. 
C)  the value associated with one more unit of an activity. 
D)  a value that is most appropriately identified in a footnote. 
A)  the value associated with an unimportant, or marginal, activity. 
B)  a value entered as an explanatory item in the margin of a balance sheet or other accounts. 
C)  the value associated with one more unit of an activity. 
D)  a value that is most appropriately identified in a footnote.

Question 16

Total profit is maximized when marginal benefit _____ marginal cost.

Accepted Answer

A)  is more than 
B)  is less than 
C)  is equal to 
D)  approaches 
A)  is more than 
B)  is less than 
C)  is equal to 
D)  approaches

Question 17

Use the following to answer questions:  
-(Table: Tutoring) Look at the table Tutoring. If he can charge all students their willingness to pay, Sigmund's optimal number of tutoring hours is:

Accepted Answer

A)  five. 
B)  four. 
C)  three. 
D)  two. 
A)  five. 
B)  four. 
C)  three. 
D)  two.

Question 18

Money that must be paid for the use of factors of production such as labor and capital is an:

Accepted Answer

A)  explicit cost. 
B)  accounting profit. 
C)  implicit cost. 
D)  economic profit. 
A)  explicit cost. 
B)  accounting profit. 
C)  implicit cost. 
D)  economic profit.

Question 19

Use the following to answer questions:  
-(Table: Marginal and Total Benefit) Look at the table Marginal and Total Benefit. Rodger is deciding how many football games he wants to attend this year. Suppose football tickets cost $10, but suppose too that the star player just got injured and will be out for the season. As a result of the injury, Rodger's total benefit of attending any game is now only 10% of the value shown in the table. In this case, how many games should he attend?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  6 
A)  0 
B)  1 
C)  2 
D)  6

Question 20

A person who is oversensitive to loss and is unwilling to recognize the loss and move on has:

Accepted Answer

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

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

Some highways have one lane; others have two, three, or more. If each lane costs $10 million per mile, an economist assumes that the total benefit of a three-lane highway must be _____ million per mile.

If a star college quarterback turns down a multimillion-dollar offer from the NFL to return for his senior year of college, he may be exhibiting:

The _____ benefit is the amount by which an additional unit of an activity increases its total benefit.

Which of the following best describes a "how much" decision?

You own a small deli that sells sandwiches, salads, and soup. Which of the following is an implicit cost of the business?

Sara spends $25 for an all-day ticket to an amusement park. After one ride, it begins to rain and she wishes she had never come. Since she has already paid for her ticket, she should stay at the amusement park until it closes or she has wasted her $25.

Sunk costs:

Which of the following is an "either-or" decision?

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

Since they have already paid for their tickets, it does not make economic sense for fans to leave before a game is finished.

If the accounting profit for a firm is negative:

In economics, a marginal value refers to:

Total profit is maximized when marginal benefit _____ marginal cost.

Use the following to answer questions: -(Table: Tutoring) Look at the table Tutoring. If he can charge all students their willingness to pay, Sigmund's optimal number of tutoring hours is:

Money that must be paid for the use of factors of production such as labor and capital is an:

A person who is oversensitive to loss and is unwilling to recognize the loss and move on has:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

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 Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 9: Decision Making by Individuals Firms

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

Some highways have one lane; others have two, three, or more. If each lane costs $10 million per mile, an economist assumes that the total benefit of a three-lane highway must be _____ million per mile.

If a star college quarterback turns down a multimillion-dollar offer from the NFL to return for his senior year of college, he may be exhibiting:

The _____ benefit is the amount by which an additional unit of an activity increases its total benefit.

Which of the following best describes a "how much" decision?

You own a small deli that sells sandwiches, salads, and soup. Which of the following is an implicit cost of the business?

Sara spends $25 for an all-day ticket to an amusement park. After one ride, it begins to rain and she wishes she had never come. Since she has already paid for her ticket, she should stay at the amusement park until it closes or she has wasted her $25.

Sunk costs:

Which of the following is an "either-or" decision?

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

Since they have already paid for their tickets, it does not make economic sense for fans to leave before a game is finished.

If the accounting profit for a firm is negative:

In economics, a marginal value refers to:

Total profit is maximized when marginal benefit _____ marginal cost.

Use the following to answer questions: -(Table: Tutoring) Look at the table Tutoring. If he can charge all students their willingness to pay, Sigmund's optimal number of tutoring hours is:

Money that must be paid for the use of factors of production such as labor and capital is an:

A person who is oversensitive to loss and is unwilling to recognize the loss and move on has:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

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 Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

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