Question 1

As George ate pizza during one recent outing, he found that he enjoyed each additional slice less and less. This implies that his marginal benefit was:

Accepted Answer

A)  decreasing. 
B)  increasing. 
C)  constant. 
D)  vertical. 
A)  decreasing. 
B)  increasing. 
C)  constant. 
D)  vertical.

Question 2

Any expense that is not recoverable is considered a sunk cost.

Accepted Answer

A) True 
 B)False

Question 3

If a decision maker chooses an option that leaves him or her worse off than choosing another available option, he or she is:

Accepted Answer

A)  using bounded rationality. 
B)  basing the decision on risk aversion. 
C)  making an irrational decision. 
D)  making a rational decision. 
A)  using bounded rationality. 
B)  basing the decision on risk aversion. 
C)  making an irrational decision. 
D)  making a rational decision.

Question 4

George owns a dude ranch in Texas. He pays $32,000 per year in insurance, $408,000 in wages, and $23,000 in supplies. He forgoes $32,000 per year he could make as a police officer. His total revenue last year equaled $460,000. That means his economic _____ equaled _____.

Accepted Answer

A)  profit; $3,000 
B)  losses; $3,000 
C)  losses; $35,000 
D)  profit; $35,000 
A)  profit; $3,000 
B)  losses; $3,000 
C)  losses; $35,000 
D)  profit; $35,000

Question 5

Profit computed without implicit costs is _____ profit.

Accepted Answer

A)  explicit 
B)  accounting 
C)  implicit 
D)  economic 
A)  explicit 
B)  accounting 
C)  implicit 
D)  economic

Question 6

Use the following to answer questions:  
-(Table: Marginal Benefit of Sweatshirts) Look at the table Marginal Benefit of Sweatshirts. The marginal benefit of producing the second sweatshirt is:

Accepted Answer

A)  $31. 
B)  $16. 
C)  $15. 
D)  $14. 
A)  $31. 
B)  $16. 
C)  $15. 
D)  $14.

Question 7

Use the following to answer questions:  
-(Table: Tutoring) Look at the table Tutoring. If the college requires all tutors to register with the dean and charges each tutor $10 to register, Sigmund's optimal number of tutoring hours will be:

Accepted Answer

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

Question 8

Until recently Rosemarie worked as an accountant, earning $30,000 annually. Then she inherited a piece of commercial real estate that had been renting for $12,000 annually. Rosemarie decided to leave her job and operate a Peruvian restaurant in the space she inherited. At the end of the first year, her books showed total revenues of $260,000 and total costs of $230,000 for food, utilities, cooks, and other supplies. Her economic profit at the end of one year is:

Accepted Answer

A)  $230,000. 
B)  $30,000. 
C)  $0. 
D)  -$12,000. 
A)  $230,000. 
B)  $30,000. 
C)  $0. 
D)  -$12,000.

Question 9

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 10

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 11

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 12

A sunk cost should be ignored in decisions about future actions.

Accepted Answer

A) True 
 B)False

Question 13

Use the following to answer questions:  
-(Table: Tutoring) Look at the table Tutoring. Sigmund faces:

Accepted Answer

A)  increasing marginal benefit. 
B)  decreasing marginal benefit. 
C)  increasing marginal cost. 
D)  constant marginal cost. 
A)  increasing marginal benefit. 
B)  decreasing marginal benefit. 
C)  increasing marginal cost. 
D)  constant marginal cost.

Question 14

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 15

The tendency to avoid making a decision 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 16

Economists' and psychologists' attempts to understand and explain why people make decisions that appear to be irrational is the field of study called _____ economics

Accepted Answer

A)  international 
B)  irrational 
C)  rational 
D)  behavioral 
A)  international 
B)  irrational 
C)  rational 
D)  behavioral

Question 17

In making an "either-or" decision:

Accepted Answer

A)  choose the activity that results in the greater economic profit. 
B)  choose the activity that results in the greater accounting profit. 
C)  continue in an activity as long as the marginal cost is greater than the marginal benefit. 
D)  continue in an activity as long as the marginal cost is less than the marginal benefit. 
A)  choose the activity that results in the greater economic profit. 
B)  choose the activity that results in the greater accounting profit. 
C)  continue in an activity as long as the marginal cost is greater than the marginal benefit. 
D)  continue in an activity as long as the marginal cost is less than the marginal benefit.

Question 18

Marginal analysis should be used in "either-or" decisions.

Accepted Answer

A) True 
 B)False

Question 19

The amount by which an additional unit of an activity increases total cost is:

Accepted Answer

A)  net benefit. 
B)  marginal benefit. 
C)  negative benefit. 
D)  marginal cost. 
A)  net benefit. 
B)  marginal benefit. 
C)  negative benefit. 
D)  marginal cost.

Question 20

Which of the following is a "how much" decision?

Accepted Answer

A)  Mary is trying to decide whether to go to work or go to college after she graduates from high school next month. 
B)  Andrea is trying to decide whether to go to graduate school in economics or go to law school. 
C)  Tim is trying to decide the amount of money to save each month to buy a new car next year. 
D)  Andy is trying to decide whether to take a prep course for the Law School Admissions Test. 
A)  Mary is trying to decide whether to go to work or go to college after she graduates from high school next month. 
B)  Andrea is trying to decide whether to go to graduate school in economics or go to law school. 
C)  Tim is trying to decide the amount of money to save each month to buy a new car next year. 
D)  Andy is trying to decide whether to take a prep course for the Law School Admissions Test.

As George ate pizza during one recent outing, he found that he enjoyed each additional slice less and less. This implies that his marginal benefit was:

Any expense that is not recoverable is considered a sunk cost.

If a decision maker chooses an option that leaves him or her worse off than choosing another available option, he or she is:

George owns a dude ranch in Texas. He pays $32,000 per year in insurance, $408,000 in wages, and $23,000 in supplies. He forgoes $32,000 per year he could make as a police officer. His total revenue last year equaled $460,000. That means his economic _ equaled _.

Profit computed without implicit costs is _____ profit.

Use the following to answer questions: -(Table: Marginal Benefit of Sweatshirts) Look at the table Marginal Benefit of Sweatshirts. The marginal benefit of producing the second sweatshirt is:

Use the following to answer questions: -(Table: Tutoring) Look at the table Tutoring. If the college requires all tutors to register with the dean and charges each tutor $10 to register, Sigmund's optimal number of tutoring hours will be:

People are willing to buy insurance because of:

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.

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

A sunk cost should be ignored in decisions about future actions.

Use the following to answer questions: -(Table: Tutoring) Look at the table Tutoring. Sigmund faces:

Accountants use only _____ costs in their computations.

The tendency to avoid making a decision is:

Economists' and psychologists' attempts to understand and explain why people make decisions that appear to be irrational is the field of study called _____ economics

In making an "either-or" decision:

Marginal analysis should be used in "either-or" decisions.

The amount by which an additional unit of an activity increases total cost is:

Which of the following is a "how much" decision?

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

As George ate pizza during one recent outing, he found that he enjoyed each additional slice less and less. This implies that his marginal benefit was:

Any expense that is not recoverable is considered a sunk cost.

If a decision maker chooses an option that leaves him or her worse off than choosing another available option, he or she is:

George owns a dude ranch in Texas. He pays $32,000 per year in insurance, $408,000 in wages, and $23,000 in supplies. He forgoes $32,000 per year he could make as a police officer. His total revenue last year equaled $460,000. That means his economic _____ equaled _____.

Profit computed without implicit costs is _____ profit.

Use the following to answer questions: -(Table: Marginal Benefit of Sweatshirts) Look at the table Marginal Benefit of Sweatshirts. The marginal benefit of producing the second sweatshirt is:

Use the following to answer questions: -(Table: Tutoring) Look at the table Tutoring. If the college requires all tutors to register with the dean and charges each tutor $10 to register, Sigmund's optimal number of tutoring hours will be:

People are willing to buy insurance because of:

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.

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

A sunk cost should be ignored in decisions about future actions.

Use the following to answer questions: -(Table: Tutoring) Look at the table Tutoring. Sigmund faces:

Accountants use only _____ costs in their computations.

The tendency to avoid making a decision is:

Economists' and psychologists' attempts to understand and explain why people make decisions that appear to be irrational is the field of study called _____ economics

In making an "either-or" decision:

Marginal analysis should be used in "either-or" decisions.

The amount by which an additional unit of an activity increases total cost is:

Which of the following is a "how much" decision?

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

George owns a dude ranch in Texas. He pays $32,000 per year in insurance, $408,000 in wages, and $23,000 in supplies. He forgoes $32,000 per year he could make as a police officer. His total revenue last year equaled $460,000. That means his economic _ equaled _.

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.

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