Question 1

In choosing between apartments in two different locations,the marginal commuting cost is given by ________.

Accepted Answer

A)  the sum of the commuting cost from each apartment to the destination 
B)  the commuting cost from the apartment located closer to the destination 
C)  the commuting cost from the apartment located farther away from the destination 
D)  the difference between the commuting cost from two different apartments to the destination 
A)  the sum of the commuting cost from each apartment to the destination 
B)  the commuting cost from the apartment located closer to the destination 
C)  the commuting cost from the apartment located farther away from the destination 
D)  the difference between the commuting cost from two different apartments to the destination

Question 2

What is meant by the term "optimization?" What do economists usually believe about how individuals optimize?

Accepted Answer

Choosing the best option from a set of f

Question 3

Shirley has to choose between a 2-day trip and a 3-day trip to Hollywood.The table below shows the expected benefit and cost for the different days.Apply both optimization using total value and optimization using marginal analysis to determine what Shirley's optimum decision should be.Does the decision differ with the techniques used? Which technique is faster to implement?

Accepted Answer

Optimization using total value requires

Question 4

If the opportunity cost of time is $20 per hour and an individual spends 20 hours in commuting every month,the opportunity cost of his commute is ________.

Accepted Answer

A)  $1 per month 
B)  $20 per month 
C)  $200 per month 
D)  $400 per month 
A)  $1 per month 
B)  $20 per month 
C)  $200 per month 
D)  $400 per month

Question 5

Scenario: Ryan wants to rent an apartment. The following table shows the monthly rent of five apartments and the number of hours per month it takes to commute to work from each apartment. Ryan's opportunity cost of time is $15 per hour.
  
-Refer to the scenario above.What is the total cost incurred per month if Ryan rents Apartment 5?

Accepted Answer

A)  $2,150 
B)  $2,270 
C)  $2,400 
D)  $2,265 
A)  $2,150 
B)  $2,270 
C)  $2,400 
D)  $2,265

Question 6

-Refer to the table above.If the opportunity cost of time increases to $60 per hour,renting which apartment will turn out to be the most expensive every month?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 7

If an individual's opportunity cost of commute is $300 per month and his monthly commuting time is 60 hours,his opportunity cost of time is ________.

Accepted Answer

A)  $5 per hour 
B)  $10 per hour 
C)  $30 per hour 
D)  $60 per hour 
A)  $5 per hour 
B)  $10 per hour 
C)  $30 per hour 
D)  $60 per hour

Question 8

If the total cost incurred by a firm in hiring ten workers is $45 and the total cost incurred when the eleventh worker is hired is $60,the marginal cost of hiring the eleventh worker is ________.

Accepted Answer

A)  $1.33 
B)  $15 
C)  $20 
D)  $105 
A)  $1.33 
B)  $15 
C)  $20 
D)  $105

Question 9

What is the Principle of Optimization at the Margin? Explain with an example.

Accepted Answer

The Principle of Optimization at the Mar

Question 10

To calculate the ________ of an alternative,an individual needs to estimate ________ of the alternative.

Accepted Answer

A)  marginal benefit; the total cost 
B)  marginal cost; the total benefit 
C)  opportunity cost; the total benefit 
D)  net benefit; both the cost and the benefit 
A)  marginal benefit; the total cost 
B)  marginal cost; the total benefit 
C)  opportunity cost; the total benefit 
D)  net benefit; both the cost and the benefit

Question 11

Making choices by selecting the best feasible option,given the available information,is referred to as ________.

Accepted Answer

A)  delegation 
B)  imposition 
C)  actualization 
D)  optimization 
A)  delegation 
B)  imposition 
C)  actualization 
D)  optimization

Question 12

Total cost falls when marginal cost is ________,and total cost rises when marginal cost is ________.

Accepted Answer

A)  zero; negative 
B)  zero; positive 
C)  positive; negative 
D)  negative; positive 
A)  zero; negative 
B)  zero; positive 
C)  positive; negative 
D)  negative; positive

Question 13

Which of the following is an example of marginal analysis?

Accepted Answer

A)  To determine the optimal number of workers, a firm calculates the net benefits of hiring an extra worker. 
B)  To determine the optimal amount of fertilizer to be used, a farmer calculates the total benefits of using a given amount of fertilizer. 
C)  To choose the optimal apartment to rent, an individual estimates the net benefits of renting an apartment close to his place of work. 
D)  To determine the optimal output that a firm should sell, the manager calculates the total revenue earned by selling different levels of output. 
A)  To determine the optimal number of workers, a firm calculates the net benefits of hiring an extra worker. 
B)  To determine the optimal amount of fertilizer to be used, a farmer calculates the total benefits of using a given amount of fertilizer. 
C)  To choose the optimal apartment to rent, an individual estimates the net benefits of renting an apartment close to his place of work. 
D)  To determine the optimal output that a firm should sell, the manager calculates the total revenue earned by selling different levels of output.

Question 14

An individual pays $100 every month as rent for an apartment,and his monthly opportunity cost of commuting from the apartment to his place of work is $40.Which of the following statements is then true?

Accepted Answer

A)  The direct cost of renting the apartment is $140 
B)  The indirect cost of renting the apartment is $140 
C)  The direct cost of renting the apartment is $40, whereas the indirect cost of renting the apartment is $100 
D)  The direct cost of renting the apartment is $100, whereas the indirect cost of renting the apartment is $40 
A)  The direct cost of renting the apartment is $140 
B)  The indirect cost of renting the apartment is $140 
C)  The direct cost of renting the apartment is $40, whereas the indirect cost of renting the apartment is $100 
D)  The direct cost of renting the apartment is $100, whereas the indirect cost of renting the apartment is $40

Question 15

Gary has to decide between attending a 2-day art workshop and a 4-day art workshop.If he evaluates only the change in net benefit when he switches between the two options,he is using the technique of ________.

Accepted Answer

A)  mean analysis 
B)  before and after comparisons 
C)  optimization using total value 
D)  optimization using marginal analysis 
A)  mean analysis 
B)  before and after comparisons 
C)  optimization using total value 
D)  optimization using marginal analysis

Question 16

In a marketplace,the rental price of apartments is determined by negotiations between ________.

Accepted Answer

A)  renters and regulators 
B)  renters and landlords 
C)  landlords and regulators 
D)  politicians and regulators 
A)  renters and regulators 
B)  renters and landlords 
C)  landlords and regulators 
D)  politicians and regulators

Question 17

Which of the following statements is true?

Accepted Answer

A)  Marginal analysis is a key component in the process of optimization using total value. 
B)  Only direct costs are considered when the net benefits of the alternatives are calculated. 
C)  In both the techniques of optimization, all costs have to be converted to the same unit of measurement. 
D)  Optimization using total value calculates the change in net benefits when a person switches from one alternative to another. 
A)  Marginal analysis is a key component in the process of optimization using total value. 
B)  Only direct costs are considered when the net benefits of the alternatives are calculated. 
C)  In both the techniques of optimization, all costs have to be converted to the same unit of measurement. 
D)  Optimization using total value calculates the change in net benefits when a person switches from one alternative to another.

Question 18

________ uses the concept of marginal analysis to determine the optimum choice.

Accepted Answer

A)  Empiricism 
B)  Optimization using total value 
C)  Before and after comparisons 
D)  Optimization using marginal analysis 
A)  Empiricism 
B)  Optimization using total value 
C)  Before and after comparisons 
D)  Optimization using marginal analysis

Question 19

If the net benefit of Project A is $10 and that of Project B is $12,which of the following statements is true?

Accepted Answer

A)  An individual can optimize by choosing Project A. 
B)  An individual can optimize by choosing Project B. 
C)  Switching from Project A to Project B reduces the net benefit by $2. 
D)  Switching from Project A to Project B increases the net benefit by $1.2. 
A)  An individual can optimize by choosing Project A. 
B)  An individual can optimize by choosing Project B. 
C)  Switching from Project A to Project B reduces the net benefit by $2. 
D)  Switching from Project A to Project B increases the net benefit by $1.2.

Question 20

When optimizing using total value,if the ________ exceed the ________,Project A is chosen over Project B.

Accepted Answer

A)  net benefits of Project A; net benefits of Project B 
B)  total benefits of Project B; total benefits of Project A 
C)  marginal costs of Project A; marginal costs of Project B 
D)  marginal benefits of Project B; marginal benefits of Project A 
A)  net benefits of Project A; net benefits of Project B 
B)  total benefits of Project B; total benefits of Project A 
C)  marginal costs of Project A; marginal costs of Project B 
D)  marginal benefits of Project B; marginal benefits of Project A

In choosing between apartments in two different locations,the marginal commuting cost is given by ________.

What is meant by the term "optimization?" What do economists usually believe about how individuals optimize?

If the opportunity cost of time is $20 per hour and an individual spends 20 hours in commuting every month,the opportunity cost of his commute is ________.

-Refer to the table above.If the opportunity cost of time increases to $60 per hour,renting which apartment will turn out to be the most expensive every month?

If an individual's opportunity cost of commute is $300 per month and his monthly commuting time is 60 hours,his opportunity cost of time is ________.

If the total cost incurred by a firm in hiring ten workers is $45 and the total cost incurred when the eleventh worker is hired is $60,the marginal cost of hiring the eleventh worker is ________.

What is the Principle of Optimization at the Margin? Explain with an example.

To calculate the of an alternative,an individual needs to estimate of the alternative.

Making choices by selecting the best feasible option,given the available information,is referred to as ________.

Total cost falls when marginal cost is ,and total cost rises when marginal cost is .

Which of the following is an example of marginal analysis?

An individual pays $100 every month as rent for an apartment,and his monthly opportunity cost of commuting from the apartment to his place of work is $40.Which of the following statements is then true?

Gary has to decide between attending a 2-day art workshop and a 4-day art workshop.If he evaluates only the change in net benefit when he switches between the two options,he is using the technique of ________.

In a marketplace,the rental price of apartments is determined by negotiations between ________.

Which of the following statements is true?

________ uses the concept of marginal analysis to determine the optimum choice.

If the net benefit of Project A is $10 and that of Project B is $12,which of the following statements is true?

When optimizing using total value,if the exceed the ,Project A is chosen over Project B.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

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Exam 3: Optimization: Doing the Best You Can

In choosing between apartments in two different locations,the marginal commuting cost is given by ________.

What is meant by the term "optimization?" What do economists usually believe about how individuals optimize?

If the opportunity cost of time is $20 per hour and an individual spends 20 hours in commuting every month,the opportunity cost of his commute is ________.

-Refer to the table above.If the opportunity cost of time increases to $60 per hour,renting which apartment will turn out to be the most expensive every month?

If an individual's opportunity cost of commute is $300 per month and his monthly commuting time is 60 hours,his opportunity cost of time is ________.

If the total cost incurred by a firm in hiring ten workers is $45 and the total cost incurred when the eleventh worker is hired is $60,the marginal cost of hiring the eleventh worker is ________.

What is the Principle of Optimization at the Margin? Explain with an example.

To calculate the ________ of an alternative,an individual needs to estimate ________ of the alternative.

Making choices by selecting the best feasible option,given the available information,is referred to as ________.

Total cost falls when marginal cost is ________,and total cost rises when marginal cost is ________.

Which of the following is an example of marginal analysis?

An individual pays $100 every month as rent for an apartment,and his monthly opportunity cost of commuting from the apartment to his place of work is $40.Which of the following statements is then true?

Gary has to decide between attending a 2-day art workshop and a 4-day art workshop.If he evaluates only the change in net benefit when he switches between the two options,he is using the technique of ________.

In a marketplace,the rental price of apartments is determined by negotiations between ________.

Which of the following statements is true?

________ uses the concept of marginal analysis to determine the optimum choice.

If the net benefit of Project A is $10 and that of Project B is $12,which of the following statements is true?

When optimizing using total value,if the ________ exceed the ________,Project A is chosen over Project B.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Macroeconomics and International Trade

Open Economy Macroeconomics

Filters

To calculate the of an alternative,an individual needs to estimate of the alternative.

Total cost falls when marginal cost is ,and total cost rises when marginal cost is .

When optimizing using total value,if the exceed the ,Project A is chosen over Project B.