Question 1

Which of the following statements identifies a similarity between optimization using total value and optimization using marginal analysis?

Accepted Answer

A)  Both techniques consider only the costs of different alternatives. 
B)  Both techniques consider only the total benefits of different alternatives. 
C)  Both techniques evaluate the total net benefit of different alternatives to arrive at a decision. 
D)  Both techniques require the conversion of all costs and benefits into a common unit of measurement. 
A)  Both techniques consider only the costs of different alternatives. 
B)  Both techniques consider only the total benefits of different alternatives. 
C)  Both techniques evaluate the total net benefit of different alternatives to arrive at a decision. 
D)  Both techniques require the conversion of all costs and benefits into a common unit of measurement. D

Question 2

Which of the following statements identifies a difference between optimization using total value and optimization using marginal analysis?

Accepted Answer

A)  Optimization using total value compares only the costs of different alternatives, whereas optimization using marginal analysis compares only the benefits of different alternatives. 
B)  Optimization using total value compares only the benefits from different alternatives, whereas optimization using marginal analysis compares only the costs of different alternatives. 
C)  Optimization using total value calculates the net benefits of different alternatives, whereas optimization using marginal analysis calculates the change in net benefits when switching from one alternative to another. 
D)  Optimization using total value calculates the change in net benefits when switching from one alternative to another, whereas optimization using marginal analysis calculates the net benefits of different alternatives. 
A)  Optimization using total value compares only the costs of different alternatives, whereas optimization using marginal analysis compares only the benefits of different alternatives. 
B)  Optimization using total value compares only the benefits from different alternatives, whereas optimization using marginal analysis compares only the costs of different alternatives. 
C)  Optimization using total value calculates the net benefits of different alternatives, whereas optimization using marginal analysis calculates the change in net benefits when switching from one alternative to another. 
D)  Optimization using total value calculates the change in net benefits when switching from one alternative to another, whereas optimization using marginal analysis calculates the net benefits of different alternatives. C

Question 3

Optimization using marginal analysis analyzes ________.

Accepted Answer

A)  the total net benefits of different alternatives 
B)  only the costs of an alternative and not the benefits 
C)  the total net benefits of the alternative that looks the most attractive 
D)  the change in the net benefits resulting from a shift from one alternative to another 
A)  the total net benefits of different alternatives 
B)  only the costs of an alternative and not the benefits 
C)  the total net benefits of the alternative that looks the most attractive 
D)  the change in the net benefits resulting from a shift from one alternative to another D

Question 4

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days.
-Refer to the scenario above.If Sarah is optimizing using marginal analysis,then which of the following statements is true?

Accepted Answer

A)  She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the cost of staying for the third day. 
B)  She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the benefits of staying for the first 2 days. 
C)  She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days. 
D)  She will rent the hotel room for 3 days if the cost of staying for the first 2 days is less than the cost of staying for the third day. 
A)  She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the cost of staying for the third day. 
B)  She will rent the hotel room for 3 days if the benefit of staying for the third day exceeds the benefits of staying for the first 2 days. 
C)  She will rent the hotel room for 3 days if the net benefit of staying for 3 days exceeds the net benefit of staying for 2 days. 
D)  She will rent the hotel room for 3 days if the cost of staying for the first 2 days is less than the cost of staying for the third day.

Question 5

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 6

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 3?

Accepted Answer

A)  $2,000 
B)  $2,050 
C)  $2,150 
D)  $2,270 
A)  $2,000 
B)  $2,050 
C)  $2,150 
D)  $2,270

Question 7

Among a set of alternatives with the same total costs,an individual is said to optimize if she chooses an alternative that has the ________.

Accepted Answer

A)  highest total benefit 
B)  highest risk 
C)  lowest opportunity costs 
D)  highest net costs 
A)  highest total benefit 
B)  highest risk 
C)  lowest opportunity costs 
D)  highest net costs

Question 8

Both optimization using total value and optimization using marginal analysis ________.

Accepted Answer

A)  consider only the benefits from different alternatives 
B)  consider only the costs incurred in different alternatives 
C)  provide identical answers when comparing two alternatives 
D)  require the calculation of the change in net benefits when switching from one alternative to another 
A)  consider only the benefits from different alternatives 
B)  consider only the costs incurred in different alternatives 
C)  provide identical answers when comparing two alternatives 
D)  require the calculation of the change in net benefits when switching from one alternative to another

Question 9

The techniques of optimization using total value and optimization using marginal analysis ________.

Accepted Answer

A)  cannot be used to compare the same set of alternatives 
B)  compare only the costs and ignore the benefits of the alternatives 
C)  provide identical answers when comparing the same set of alternatives 
D)  may provide different answers when comparing the same set of alternatives 
A)  cannot be used to compare the same set of alternatives 
B)  compare only the costs and ignore the benefits of the alternatives 
C)  provide identical answers when comparing the same set of alternatives 
D)  may provide different answers when comparing the same set of alternatives

Question 10

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 11

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 12

If an alternative provides a benefit of $8 to an individual at a cost of $6,the net benefit of the alternative equals ________.

Accepted Answer

A)  $0.75 
B)  $2 
C)  $14 
D)  $48 
A)  $0.75 
B)  $2 
C)  $14 
D)  $48

Question 13

Which of the following is an example of before and after comparisons?

Accepted Answer

A)  The estimation of the quantity demanded of a good when its price is $5 
B)  The estimation of the demand for a particular good when consumer income is $10 
C)  The estimation of the ideal number of workers a firm should hire when wage rate is $20 per hour 
D)  The estimation of the supply of a good when the wage rate of labor changes from $30 to $10 per hour 
A)  The estimation of the quantity demanded of a good when its price is $5 
B)  The estimation of the demand for a particular good when consumer income is $10 
C)  The estimation of the ideal number of workers a firm should hire when wage rate is $20 per hour 
D)  The estimation of the supply of a good when the wage rate of labor changes from $30 to $10 per hour

Question 14

________ is the incremental cost generated by moving from one feasible alternative to the next feasible alternative.

Accepted Answer

A)  Total cost 
B)  Indirect cost 
C)  Marginal cost 
D)  Opportunity cost 
A)  Total cost 
B)  Indirect cost 
C)  Marginal cost 
D)  Opportunity cost

Question 15

Kevin is a student who is planning to attend a university in California.In the evening,he takes music lessons.Kevin has to find an apartment to rent.The apartment should be at a suitable distance from two places,his university and his music classes.The commuting times from apartments in four different locations to both destinations are shown in the table below.Given that Kevin's opportunity cost of time is $10 per hour,find his optimum choice by applying:
a)Optimization using total value
b)Optimization using marginal analysis

Accepted Answer

a)To optimize using total value,it is re

Question 16

Optimization using total value calculates ________.

Accepted Answer

A)  the total net benefits of different alternatives 
B)  only the benefits of an alternative and not the costs 
C)  only the costs of an alternative and not the benefits 
D)  the change in net benefits resulting from a shift from one alternative to another 
A)  the total net benefits of different alternatives 
B)  only the benefits of an alternative and not the costs 
C)  only the costs of an alternative and not the benefits 
D)  the change in net benefits resulting from a shift from one alternative to another

Question 17

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 18

Which of the following statements is true?

Accepted Answer

A)  It is easier for a person to optimize when he has less information. 
B)  Optimization implies choosing the best option from a set of alternatives. 
C)  People always successfully optimize given the limited information they have. 
D)  Optimization is an easy process, and all economic agents are perfect optimizers. 
A)  It is easier for a person to optimize when he has less information. 
B)  Optimization implies choosing the best option from a set of alternatives. 
C)  People always successfully optimize given the limited information they have. 
D)  Optimization is an easy process, and all economic agents are perfect optimizers.

Question 19

If the marginal rent cost of moving from Apartment 1 to Apartment 2 is −$60 and the marginal commuting cost of moving from Apartment 1 to Apartment 2 is $40,moving from Apartment 1 to 2 will ________.

Accepted Answer

A)  cost the renter $60 more in rent and $40 more in commuting 
B)  save the renter $60 more in rent and $40 more in commuting 
C)  save the renter $60 in rent but cost $40 more in commuting 
D)  cost the renter $60 more in rent but save $40 in commuting 
A)  cost the renter $60 more in rent and $40 more in commuting 
B)  save the renter $60 more in rent and $40 more in commuting 
C)  save the renter $60 in rent but cost $40 more in commuting 
D)  cost the renter $60 more in rent but save $40 in commuting

Question 20

What are the different steps involved in optimization using marginal analysis?

Accepted Answer

Optimization using marginal analysis has

Which of the following statements identifies a similarity between optimization using total value and optimization using marginal analysis?

Which of the following statements identifies a difference between optimization using total value and optimization using marginal analysis?

Optimization using marginal analysis analyzes ________.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. -Refer to the scenario above.If Sarah is optimizing using marginal analysis,then which of the following statements is true?

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 ________.

Among a set of alternatives with the same total costs,an individual is said to optimize if she chooses an alternative that has the ________.

Both optimization using total value and optimization using marginal analysis ________.

The techniques of optimization using total value and optimization using marginal analysis ________.

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 .

If an alternative provides a benefit of $8 to an individual at a cost of $6,the net benefit of the alternative equals ________.

Which of the following is an example of before and after comparisons?

________ is the incremental cost generated by moving from one feasible alternative to the next feasible alternative.

Optimization using total value calculates ________.

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 ________.

Which of the following statements is true?

If the marginal rent cost of moving from Apartment 1 to Apartment 2 is −$60 and the marginal commuting cost of moving from Apartment 1 to Apartment 2 is $40,moving from Apartment 1 to 2 will ________.

What are the different steps involved in optimization using marginal analysis?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

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Exam 3: Optimization: Doing the Best You Can

Which of the following statements identifies a similarity between optimization using total value and optimization using marginal analysis?

Which of the following statements identifies a difference between optimization using total value and optimization using marginal analysis?

Optimization using marginal analysis analyzes ________.

Scenario: Sarah has to choose between renting a hotel room for 2 days and renting a hotel room for 3 days. -Refer to the scenario above.If Sarah is optimizing using marginal analysis,then which of the following statements is true?

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 ________.

Among a set of alternatives with the same total costs,an individual is said to optimize if she chooses an alternative that has the ________.

Both optimization using total value and optimization using marginal analysis ________.

The techniques of optimization using total value and optimization using marginal analysis ________.

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 ________.

If an alternative provides a benefit of $8 to an individual at a cost of $6,the net benefit of the alternative equals ________.

Which of the following is an example of before and after comparisons?

________ is the incremental cost generated by moving from one feasible alternative to the next feasible alternative.

Optimization using total value calculates ________.

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 ________.

Which of the following statements is true?

If the marginal rent cost of moving from Apartment 1 to Apartment 2 is −$60 and the marginal commuting cost of moving from Apartment 1 to Apartment 2 is $40,moving from Apartment 1 to 2 will ________.

What are the different steps involved in optimization using marginal analysis?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Demand, supply, and Equilibrium

Consumers and Incentives

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

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