Exam 9: Decision Making by Individuals and Firms

(Table: The Benefit of Producing Gadgets) Look at the table The Benefit of Producing Gadgets.You own a small manufacturing company that produces gadgets.According to the table, the marginal benefit of consuming gadgets is: A.constant and equal to $5. B.decreasing at a constant rate of $5. C.decreasing at a decreasing rate. D.increasing at a decreasing rate.

(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts.The marginal cost of the second sweatshirt is: A.$9. B.$20. C.$11. D.$29.

To maximize her grade in economics, Stacey should study until: A.her marginal cost of studying begins to increase. B.her marginal benefit of studying begins to decrease. C.her marginal benefit of studying equals her marginal cost of studying. D.her marginal cost of studying reaches zero.

Accounting profit takes into account depreciation, but economic profit does not.

Accountants use only costs in their computations of cost. A.opportunity B.implicit C.explicit D.variable

The habit of mentally assigning dollars to different accounts so that some dollars are worth more than others is: A.status quo bias. B.bounded rationality. C.loss aversion. D.mental accounting.

Economic profits are calculated by: A.taking the difference between total revenue and the sum of explicit and implicit costs. B.taking the difference between total revenue and explicit costs only. C.taking the difference between the total revenue and implicit costs only. D.summing total revenue, explicit and implicit costs.

The dormitories of Eastland College are part of its: A.land. B.labor. C.capital. D.explicit costs.

Figure: Marginal Benefits and Marginal Costs (Figure: Marginal Benefits and Marginal Costs) Look at the figure Marginal Benefits and Marginal Costs.As shown, more time spent studying economics adds points to economics scores (MB) but subtracts points from accounting scores (MC).The marginal benefit of studying economics when Claudia studies for 4 hours is ________ points and the marginal cost is points. A.30; 30 B.20; 10 C.20; 20 D.30; 10