Question 1

Part of the _____ associated with the Chicago Cubs baseball team is their batting cages used in practice.

Accepted Answer

A)  labor 
B)  land 
C)  capital 
D)  entrepreneurship 
A)  labor 
B)  land 
C)  capital 
D)  entrepreneurship

Question 2

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 3

Andreas is a political consultant with his own firm. He travels the country and provides campaign advice for political candidates. Last year he earned $250,000 in revenue for his services. He pays one employee $50,000 to manage the small office back home and pays $30,000 on rent and utilities for that office. His accountant tells him that if he sold all of the equipment, he could put that money in the bank and earn $3,000 in interest next year. Andreas also has received an offer to teach political science at a college at a salary of $100,000. Andreas's accounting profit is equal to _____ and his economic profit is equal to _____.

Accepted Answer

A)  $175,000; $67,000 
B)  $170,000; $67,000 
C)  $200,000; $72,000 
D)  $170,000; $70,000 
A)  $175,000; $67,000 
B)  $170,000; $67,000 
C)  $200,000; $72,000 
D)  $170,000; $70,000

Question 4

Suppose a local hardware store has explicit costs of $2 million per year and implicit costs of $44,000 per year. If the store earned an economic profit of $50,000 last year, this means that the store's accounting profit equaled:

Accepted Answer

A)  $94,000. 
B)  $6,000. 
C)  $2.05 million. 
D)  $2.044 million. 
A)  $94,000. 
B)  $6,000. 
C)  $2.05 million. 
D)  $2.044 million.

Question 5

Which of the following statements about opportunity cost is FALSE?

Accepted Answer

A)  Opportunity cost may be larger than monetary cost. 
B)  Opportunity cost includes both explicit and implicit costs. 
C)  The real or opportunity cost of something is what you must give up to get it. 
D)  Opportunity cost is synonymous with explicit cost. 
A)  Opportunity cost may be larger than monetary cost. 
B)  Opportunity cost includes both explicit and implicit costs. 
C)  The real or opportunity cost of something is what you must give up to get it. 
D)  Opportunity cost is synonymous with explicit cost.

Question 6

Werner installs custom sound systems in cars. If he installs seven systems per day, his total costs are $300. If he installs eight systems per day, his total costs are $400. Werner will install eight sound systems per day only if the eighth customer is willing to pay at least:

Accepted Answer

A)  $300. 
B)  $400. 
C)  $100. 
D)  $50. 
A)  $300. 
B)  $400. 
C)  $100. 
D)  $50.

Question 7

Use the following to answer questions  
-(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of the fourth sweatshirt is:

Accepted Answer

A)  $9. 
B)  $20. 
C)  $24. 
D)  $15. 
A)  $9. 
B)  $20. 
C)  $24. 
D)  $15.

Question 8

According to the profit-maximizing principle of marginal analysis, if the marginal benefit is _____ the marginal cost, _____.

Accepted Answer

A)  more than; an activity should be reduced 
B)  less than; an activity should be reduced 
C)  equal to; an activity is being produced at the optimal quantity 
D)  more than; net benefit is maximized 
A)  more than; an activity should be reduced 
B)  less than; an activity should be reduced 
C)  equal to; an activity is being produced at the optimal quantity 
D)  more than; net benefit is maximized

Question 9

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 10

Use the following to answer questions 
Figure: The Marginal Benefit Curve  
-(Figure: The Marginal Benefit Curve) Look at the figure The Marginal Benefit Curve. The total benefit of mowing four lawns is approximately:

Accepted Answer

A)  $25. 
B)  $35. 
C)  $80. 
D)  $114. 
A)  $25. 
B)  $35. 
C)  $80. 
D)  $114.

Question 11

Use the following to answer questions  
-(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of the third sweatshirt is:

Accepted Answer

A)  $33. 
B)  $13. 
C)  $11. 
D)  $9. 
A)  $33. 
B)  $13. 
C)  $11. 
D)  $9.

Question 12

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 13

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

Accepted Answer

A)  $9. 
B)  $20. 
C)  $11. 
D)  $29. 
A)  $9. 
B)  $20. 
C)  $11. 
D)  $29.

Question 14

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 15

Learning effects often result in _____ marginal costs.

Accepted Answer

A)  decreasing 
B)  increasing 
C)  constant 
D)  random 
A)  decreasing 
B)  increasing 
C)  constant 
D)  random

Question 16

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.

Exam 10: Decision Making by Individuals and Firms

Part of the _____ associated with the Chicago Cubs baseball team is their batting cages used in practice.

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

Suppose a local hardware store has explicit costs of $2 million per year and implicit costs of $44,000 per year. If the store earned an economic profit of $50,000 last year, this means that the store's accounting profit equaled:

Which of the following statements about opportunity cost is FALSE?

Werner installs custom sound systems in cars. If he installs seven systems per day, his total costs are $300. If he installs eight systems per day, his total costs are $400. Werner will install eight sound systems per day only if the eighth customer is willing to pay at least:

Use the following to answer questions -(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of the fourth sweatshirt is:

According to the profit-maximizing principle of marginal analysis, if the marginal benefit is _____ the marginal cost, _____.

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

Use the following to answer questions Figure: The Marginal Benefit Curve -(Figure: The Marginal Benefit Curve) Look at the figure The Marginal Benefit Curve. The total benefit of mowing four lawns is approximately:

Use the following to answer questions -(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts. The marginal cost of the third sweatshirt is:

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

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

Profit computed without implicit costs is _____ profit.

Learning effects often result in _____ marginal costs.

In economics, a marginal value refers to:

First Principles

Economic Models- Trade-Offs and Trade

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas- Meddling With Markets

Elasticity

Taxes

The Rational Consumer

International Trade

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Macroeconomics- the Big Picture

Gdp and the Consumer Price Index

Unemployment and Inflation

Long-Run Economic Growth

Savings, Investment Spending

Fiscal Policy

Money, Banking, and the Federal Reserve System

Monetary Policy

Inflation, Disinflation, and Deflation

Crises and Consequences

Macroeconomics- Events and Ideas

Open-Economy Macroeconomics

Graphs in Economics

Toward a Fuller Understanding

Consumer Preferences and Consumer Choice

Indifference Curve Analysis of Labor Supply

Filters

According to the profit-maximizing principle of marginal analysis, if the marginal benefit is _ the marginal cost, _.

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