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

While eating pizza,you discover that the marginal benefit of eating one more slice is greater than the marginal cost of that slice.You conclude that:

Accepted Answer

A)  you will be better off if you eat one more slice. 
B)  you will be no better off and no worse off if you eat one more slice. 
C)  you will be worse off if you eat one more slice. 
D)  the total cost of eating the pizza will be more than the total benefit of eating the pizza. 
A)  you will be better off if you eat one more slice. 
B)  you will be no better off and no worse off if you eat one more slice. 
C)  you will be worse off if you eat one more slice. 
D)  the total cost of eating the pizza will be more than the total benefit of eating the pizza.

Question 3

Use the following to answer questions :
Scenario: Betty's Cookie Shop
Betty runs a cookie shop where she sells cookies for $1 each.She employs five people,each of whom worked a total of 500 hours last year;she paid them $10 per hour.Her costs of equipment and raw materials add up to $75 000.Her business ability is legendary,and other companies have offered to pay Betty $100 000 to come to work for them.She also knows she could sell her cookie shop for $150 000.The bank in town pays an annual interest rate of 3% on all funds deposited with it.
-(Scenario: Betty's Cookie Shop)Use Scenario: Betty's Cookie Shop.Betty's implicit and explicit costs are equal to:

Accepted Answer

A)  $80 000. 
B)  $184 500. 
C)  $204 500. 
D)  $100 000. 
A)  $80 000. 
B)  $184 500. 
C)  $204 500. 
D)  $100 000.

Question 4

Cindy just graduated from university and started working at a large accounting firm.Although the firm will match her contributions to a retirement account,Cindy wants to wait several years before participating since there are so many things she needs to buy right now.What type of behaviour does this represent?

Accepted Answer

A)  unrealistic expectations about the future 
B)  loss aversion 
C)  mental accounting 
D)  risk aversion 
A)  unrealistic expectations about the future 
B)  loss aversion 
C)  mental accounting 
D)  risk aversion

Question 5

Suppose that York University does not have a summer programme and could rent out the campus to various summer sports camps for $100 000.The potential revenue of the summer camps represents a(n):

Accepted Answer

A)  implicit cost of capital. 
B)  explicit cost. 
C)  total cost. 
D)  sunk cost. 
A)  implicit cost of capital. 
B)  explicit cost. 
C)  total cost. 
D)  sunk cost.

Question 6

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of behaviour does this BEST represent?

Accepted Answer

A)  status quo bias 
B)  overconfidence 
C)  misperception of opportunity costs 
D)  risk aversion 
A)  status quo bias 
B)  overconfidence 
C)  misperception of opportunity costs 
D)  risk aversion

Question 7

It is not possible to earn an economic profit without also earning an accounting profit.

Accepted Answer

A) True 
 B)False

Question 8

Accounting profit differs from economic profit because:

Accepted Answer

A)  of differences in the manner in which revenue is calculated. 
B)  economic costs include explicit costs,while accounting costs do not. 
C)  accounting costs are generally higher than economic costs because accounting costs include explicit and implicit costs,while economic costs include only explicit costs. 
D)  economic costs are generally higher than accounting costs because economic costs include all opportunity costs,while accounting costs include explicit costs only. 
A)  of differences in the manner in which revenue is calculated. 
B)  economic costs include explicit costs,while accounting costs do not. 
C)  accounting costs are generally higher than economic costs because accounting costs include explicit and implicit costs,while economic costs include only explicit costs. 
D)  economic costs are generally higher than accounting costs because economic costs include all opportunity costs,while accounting costs include explicit costs only.

Question 9

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 increased 
B)  less than;an activity should be reduced 
C)  equal to;an activity should be reduced 
D)  more than;net benefit is maximized 
A)  more than;an activity should be increased 
B)  less than;an activity should be reduced 
C)  equal to;an activity should be reduced 
D)  more than;net benefit is maximized

Question 10

Use the following to answer questions : $$\begin{array}{l}
\text { Marginal Benefit of Sweatshirts }\
\begin{array} { l c } 
\hline \text { Quantity } & \
\text { of shirts } & \text { Total benefit } \
\hline 0 & \$ 0 \
1 & 16 \
2 & 31 \
3 & 45 \
4 & 58 \
5 & 70 \
\hline
\end{array}
\end{array}$$
-(Table: Marginal Benefit of Sweatshirts)Use Table: Marginal Benefit of Sweatshirts.The marginal benefit of producing the third sweatshirt is:

Accepted Answer

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

Question 11

If marginal costs of production are greater than marginal benefits of production:

Accepted Answer

A)  costs will eventually decrease. 
B)  too much of the good is being produced. 
C)  more of the good should be produced. 
D)  not all costs are being considered. 
A)  costs will eventually decrease. 
B)  too much of the good is being produced. 
C)  more of the good should be produced. 
D)  not all costs are being considered.

Question 12

Total profit is maximized when marginal benefit _____ marginal cost.

Accepted Answer

A)  is more than 
B)  is less than 
C)  is equal to 
D)  approaches 
A)  is more than 
B)  is less than 
C)  is equal to 
D)  approaches

Question 13

Marginal benefit:

Accepted Answer

A)  is the subsidiary benefit from an activity;for example,the main benefit from weight training is an increase in muscle mass,and the subsidiary or marginal benefit might be a reduction in cholesterol. 
B)  is the addition to total benefit due to undertaking one more unit of an activity. 
C)  must be increasing if total benefit is increasing. 
D)  normally increases as more of an activity is undertaken. 
A)  is the subsidiary benefit from an activity;for example,the main benefit from weight training is an increase in muscle mass,and the subsidiary or marginal benefit might be a reduction in cholesterol. 
B)  is the addition to total benefit due to undertaking one more unit of an activity. 
C)  must be increasing if total benefit is increasing. 
D)  normally increases as more of an activity is undertaken.

Question 14

Use the following to answer questions : $$\begin{array}{l}
\text { Table: TC's Pizza Parlor }\
\begin{array} { c c c } 
\hline \begin{array} { l } 
\text { Slices } \
\text { of Pizza }
\end{array} & \text { Total Costs } & \text { Total Benefits } \
\hline 0 & \$ 10 & \$ 0 \
5 & 20 & 40 \
10 & 30 & 55 \
15 & 40 & 65 \
20 & 50 & 70 \
\hline
\end{array}
\end{array}$$
-(Table: TC's Pizza Parlour)Use Table: TC's Pizza Parlour.Assume that marginal cost is constant in the intervals of production.The marginal cost for pizza production:

Accepted Answer

A)  remains constant. 
B)  increases,then decreases. 
C)  increases. 
D)  decreases. 
A)  remains constant. 
B)  increases,then decreases. 
C)  increases. 
D)  decreases.

Question 15

Which statement is an example of bounded rationality?

Accepted Answer

A)  Ann proofreads her term paper six times. 
B)  Mary feels that she has studied enough to make an A+ on her economics exam but studies another 2 hours just to be sure. 
C)  Tim studies only an hour on the morning of his economics exam because he is satisfied just to make a passing grade. 
D)  Terry does his economics homework twice to be sure that he has a thorough understanding of the topic. 
A)  Ann proofreads her term paper six times. 
B)  Mary feels that she has studied enough to make an A+ on her economics exam but studies another 2 hours just to be sure. 
C)  Tim studies only an hour on the morning of his economics exam because he is satisfied just to make a passing grade. 
D)  Terry does his economics homework twice to be sure that he has a thorough understanding of the topic.

Question 16

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 17

One of Jessuina's New Year's resolutions was to exercise more,so she bought an annual membership to the gym that allows unlimited visits.Unfortunately,the gym is so crowded and noisy that Jessuina leaves every day with a headache,without working out at all.According to marginal analysis,Jessuina should:

Accepted Answer

A)  continue using the gym for the year,since she has already paid for the membership. 
B)  join another gym only if a membership is cheaper at the new gym. 
C)  join another gym only if she can get a refund on her current membership. 
D)  stop using the gym. 
A)  continue using the gym for the year,since she has already paid for the membership. 
B)  join another gym only if a membership is cheaper at the new gym. 
C)  join another gym only if she can get a refund on her current membership. 
D)  stop using the gym.

Question 18

Use the following to answer questions : $$\begin{array}{l}
\text { Marginal Cost of Sweatshirts }\
\begin{array} { l c } 
\hline \text { Quantity } & \
\text { of shirts } & \text { Total cost } \
\hline 0 & \$ 0 \
1 & 9 \
2 & 20 \
3 & 33 \
4 & 48 \
5 & 65 \
\hline
\end{array}
\end{array}$$
-(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of producing sweatshirts is an example of _____ marginal costs.

Accepted Answer

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

Question 19

Use the following to answer question 124: $$\begin{array}{l}
\text { Table: The Benefit of Producing Gadgets }\
\begin{array} { c c } 
\hline \text { Quantity of Gadgets } \text { Total Revenue } \
\hline 0 & \$ 0 \
1 & 200 \
2 & 215 \
3 & 225 \
4 & 230 \
5 & 233 \
\hline
\end{array}
\end{array}$$
-(Table: The Benefit of Producing Gadgets)Use Table: The Benefit of Producing Gadgets.The marginal benefit of consuming gadgets is:

Accepted Answer

A)  constant and equal to $5. 
B)  decreasing at a constant rate of $5. 
C)  decreasing. 
D)  increasing at a decreasing rate. 
A)  constant and equal to $5. 
B)  decreasing at a constant rate of $5. 
C)  decreasing. 
D)  increasing at a decreasing rate.

Question 20

During its only year of operation,a firm collected $175 000 in revenue and spent $50 000 on raw materials,labour,and utilities.The owners of the firm spent $100 000 of their own money to build the firm's factory (instead of buying bonds and earning a 10% annual rate of return),which they sold at the end of the year for $100 000.The firm's economic profit is:

Accepted Answer

A)  $35 000. 
B)  $125 000. 
C)  $115 000. 
D)  $25 000. 
A)  $35 000. 
B)  $125 000. 
C)  $115 000. 
D)  $25 000.

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:

While eating pizza,you discover that the marginal benefit of eating one more slice is greater than the marginal cost of that slice.You conclude that:

Suppose that York University does not have a summer programme and could rent out the campus to various summer sports camps for $100 000.The potential revenue of the summer camps represents a(n):

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of behaviour does this BEST represent?

It is not possible to earn an economic profit without also earning an accounting profit.

Accounting profit differs from economic profit because:

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

Use the following to answer questions : Marginal Benefit of Sweatshirts Quantity of shirts Total benefit 0 \ 0 1 16 2 31 3 45 4 58 5 70 -(Table: Marginal Benefit of Sweatshirts)Use Table: Marginal Benefit of Sweatshirts.The marginal benefit of producing the third sweatshirt is:

If marginal costs of production are greater than marginal benefits of production:

Total profit is maximized when marginal benefit _____ marginal cost.

Marginal benefit:

Which statement is an example of bounded rationality?

Accountants use only _____ costs in their computations.

Use the following to answer questions : Marginal Cost of Sweatshirts Quantity of shirts Total cost 0 \ 0 1 9 2 20 3 33 4 48 5 65 -(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of producing sweatshirts is an example of _____ marginal costs.

Use the following to answer question 124: Table: The Benefit of Producing Gadgets Quantity of Gadgets Total Revenue 0 \ 0 1 200 2 215 3 225 4 230 5 233 -(Table: The Benefit of Producing Gadgets)Use Table: The Benefit of Producing Gadgets.The marginal benefit of consuming gadgets is:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 9: Decision Making by Individuals and 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:

While eating pizza,you discover that the marginal benefit of eating one more slice is greater than the marginal cost of that slice.You conclude that:

Suppose that York University does not have a summer programme and could rent out the campus to various summer sports camps for $100 000.The potential revenue of the summer camps represents a(n):

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of behaviour does this BEST represent?

It is not possible to earn an economic profit without also earning an accounting profit.

Accounting profit differs from economic profit because:

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

Use the following to answer questions : Marginal Benefit of Sweatshirts Quantity of shirts Total benefit 0 \ 0 1 16 2 31 3 45 4 58 5 70 -(Table: Marginal Benefit of Sweatshirts)Use Table: Marginal Benefit of Sweatshirts.The marginal benefit of producing the third sweatshirt is:

If marginal costs of production are greater than marginal benefits of production:

Total profit is maximized when marginal benefit _____ marginal cost.

Marginal benefit:

Which statement is an example of bounded rationality?

Accountants use only _____ costs in their computations.

Use the following to answer questions : Marginal Cost of Sweatshirts Quantity of shirts Total cost 0 \ 0 1 9 2 20 3 33 4 48 5 65 -(Table: Marginal Cost of Sweatshirts)Use Table: Marginal Cost of Sweatshirts.The marginal cost of producing sweatshirts is an example of _____ marginal costs.

Use the following to answer question 124: Table: The Benefit of Producing Gadgets Quantity of Gadgets Total Revenue 0 \ 0 1 200 2 215 3 225 4 230 5 233 -(Table: The Benefit of Producing Gadgets)Use Table: The Benefit of Producing Gadgets.The marginal benefit of consuming gadgets is:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Elasticity

Taxes

International Trade

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

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