Question 1

You plan to attend a movie on Saturday night.You buy a ticket for $7 and then lose it.According to marginal analysis,you should:

Accepted Answer

A)  go home. 
B)  buy another ticket and attend the movie. 
C)  buy another ticket and attend the movie only if your marginal benefit of seeing the movie is more than $14. 
D)  look for the lost ticket. 
A)  go home. 
B)  buy another ticket and attend the movie. 
C)  buy another ticket and attend the movie only if your marginal benefit of seeing the movie is more than $14. 
D)  look for the lost ticket.

Question 2

Which statement describes 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 3

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 4

The government should spend whatever amount is necessary to save a life.

Accepted Answer

A) True 
 B)False

Question 5

Money that must be paid for the use of factors of production such as labour and capital is an:

Accepted Answer

A)  explicit cost. 
B)  accounting profit. 
C)  implicit cost. 
D)  economic profit. 
A)  explicit cost. 
B)  accounting profit. 
C)  implicit cost. 
D)  economic profit.

Question 6

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 the fourth sweatshirt is:

Accepted Answer

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

Question 7

Ian is such a big Jays fan that his benefit of seeing a Jays game is $200.He pays $100 for a ticket to see one of their playoff games.Unfortunately,he left the ticket in his jeans when he laundered them and the ticket was destroyed.According to marginal analysis,Ian should:

Accepted Answer

A)  not go to the game. 
B)  buy another ticket for $100 and attend the game. 
C)  buy another ticket and attend the game only if he can buy the ticket for less than $100. 
D)  watch the game on TV. 
A)  not go to the game. 
B)  buy another ticket for $100 and attend the game. 
C)  buy another ticket and attend the game only if he can buy the ticket for less than $100. 
D)  watch the game on TV.

Question 8

The habit of mentally assigning dollars to different accounts so that some dollars are worth more than others is:

Accepted Answer

A)  status quo bias. 
B)  bounded rationality. 
C)  loss aversion. 
D)  mental accounting. 
A)  status quo bias. 
B)  bounded rationality. 
C)  loss aversion. 
D)  mental accounting.

Question 9

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 10

The willingness to sacrifice some economic payoff to avoid a potential loss is:

Accepted Answer

A)  irrational behaviour. 
B)  bounded rationality. 
C)  the result of a concern about fairness. 
D)  risk aversion. 
A)  irrational behaviour. 
B)  bounded rationality. 
C)  the result of a concern about fairness. 
D)  risk aversion.

Question 11

The implicit cost of capital is:

Accepted Answer

A)  the explicit cost of capital that the firm might have used but didn't need to. 
B)  depreciation. 
C)  the opportunity cost of the capital used by a business. 
D)  the cost of human capital. 
A)  the explicit cost of capital that the firm might have used but didn't need to. 
B)  depreciation. 
C)  the opportunity cost of the capital used by a business. 
D)  the cost of human capital.

Question 12

If the marginal benefit received from consuming a good is less than the marginal cost of production:

Accepted Answer

A)  society's well-being can be improved if production increases. 
B)  society's well-being can be improved if production decreases. 
C)  society's well-being cannot be improved by changing production. 
D)  the market is producing too little of the good. 
A)  society's well-being can be improved if production increases. 
B)  society's well-being can be improved if production decreases. 
C)  society's well-being cannot be improved by changing production. 
D)  the market is producing too little of the good.

Question 13

Marginal analysis should be used in "either-or" decisions.

Accepted Answer

A) True 
 B)False

Question 14

Use the following to answer questions :  
-(Figure: The Marginal Benefit Curve)Use 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 15

Use the following to answer questions :
Figure: The Marginal Analysis of Cell Phones  
-(Figure: The Marginal Analysis of Cell Phones)Use Figure: The Marginal Analysis of Cell Phones.You are considering purchasing cell phones for your department.If you buy the fifth cell phone,your change in total profit will be equal to:

Accepted Answer

A)  $0. 
B)  -$2. 
C)  $2. 
D)  $4. 
A)  $0. 
B)  -$2. 
C)  $2. 
D)  $4.

Question 16

Marginal analysis is relevant for:

Accepted Answer

A)  both "either-or" and "how much" decisions. 
B)  only "either-or" decisions. 
C)  only "how much" decisions. 
D)  only situations involving the time value of money. 
A)  both "either-or" and "how much" decisions. 
B)  only "either-or" decisions. 
C)  only "how much" decisions. 
D)  only situations involving the time value of money.

Question 17

You have rented your first apartment,signing a lease that commits you to pay $500 each month for 12 months.You have an opportunity to take a trip to Europe during the entire month of June,and you will spend $2 000 travelling.Your apartment will be vacant,but because of your lease,you must still pay the rent.The cost of taking the trip to Europe is:

Accepted Answer

A)  $2 000 because the $500 for your June rent is a sunk cost. 
B)  $2 500 because this is your total spending during the month of June. 
C)  $1 500 because the June rent is an opportunity cost of travelling that must be deducted from the explicit cost of the trip. 
D)  $2 500 because the June rent is an opportunity cost of travelling and must be added to the explicit cost of the trip. 
A)  $2 000 because the $500 for your June rent is a sunk cost. 
B)  $2 500 because this is your total spending during the month of June. 
C)  $1 500 because the June rent is an opportunity cost of travelling that must be deducted from the explicit cost of the trip. 
D)  $2 500 because the June rent is an opportunity cost of travelling and must be added to the explicit cost of the trip.

Question 18

Wendy sells ice-making machines.She can sell six per week at a price of $2 000 per machine.If she charges $2 100 per machine,she will sell only five per week.The marginal benefit of selling the sixth ice-making machine is:

Accepted Answer

A)  $2 000. 
B)  $2 100. 
C)  $12 000. 
D)  $1500. 
A)  $2 000. 
B)  $2 100. 
C)  $12 000. 
D)  $1500.

Question 19

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

Accepted Answer

A)  less 
B)  that amount 
C)  more 
D)  none 
A)  less 
B)  that amount 
C)  more 
D)  none

Question 20

Use the following to answer questions :
Scenario: Accounting and Economic Profit
Rather than put the $100 000 that his grandmother left him in a mutual fund that earns 5% each year,Tommy Wang quit his job,which paid $60 000 per year,and started Wang's Wicker Furniture Store.He rented a showroom for $20 000 for the year,purchased $60 000 in wicker furniture,and incurred costs of $40 000 for sales help and advertising.In his first year,his revenue was $150 000.
-(Scenario: Accounting and Economic Profit)Use Scenario: Accounting and Economic Profit.What is the implicit cost of Wang's Wicker Furniture Store?

Accepted Answer

A)  $7 000 
B)  $60 000 
C)  $65 000 
D)  $69 000 
A)  $7 000 
B)  $60 000 
C)  $65 000 
D)  $69 000

You plan to attend a movie on Saturday night.You buy a ticket for $7 and then lose it.According to marginal analysis,you should:

Which statement describes an "either-or" decision?

Learning effects often result in _____ marginal costs.

The government should spend whatever amount is necessary to save a life.

Money that must be paid for the use of factors of production such as labour and capital is an:

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 the fourth sweatshirt is:

Ian is such a big Jays fan that his benefit of seeing a Jays game is $200.He pays $100 for a ticket to see one of their playoff games.Unfortunately,he left the ticket in his jeans when he laundered them and the ticket was destroyed.According to marginal analysis,Ian should:

The habit of mentally assigning dollars to different accounts so that some dollars are worth more than others is:

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:

The willingness to sacrifice some economic payoff to avoid a potential loss is:

The implicit cost of capital is:

If the marginal benefit received from consuming a good is less than the marginal cost of production:

Marginal analysis should be used in "either-or" decisions.

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

Marginal analysis is relevant for:

Wendy sells ice-making machines.She can sell six per week at a price of $2 000 per machine.If she charges $2 100 per machine,she will sell only five per week.The marginal benefit of selling the sixth ice-making machine is:

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

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

You plan to attend a movie on Saturday night.You buy a ticket for $7 and then lose it.According to marginal analysis,you should:

Which statement describes an "either-or" decision?

Learning effects often result in _____ marginal costs.

The government should spend whatever amount is necessary to save a life.

Money that must be paid for the use of factors of production such as labour and capital is an:

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 the fourth sweatshirt is:

Ian is such a big Jays fan that his benefit of seeing a Jays game is $200.He pays $100 for a ticket to see one of their playoff games.Unfortunately,he left the ticket in his jeans when he laundered them and the ticket was destroyed.According to marginal analysis,Ian should:

The habit of mentally assigning dollars to different accounts so that some dollars are worth more than others is:

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:

The willingness to sacrifice some economic payoff to avoid a potential loss is:

The implicit cost of capital is:

If the marginal benefit received from consuming a good is less than the marginal cost of production:

Marginal analysis should be used in "either-or" decisions.

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

Marginal analysis is relevant for:

Wendy sells ice-making machines.She can sell six per week at a price of $2 000 per machine.If she charges $2 100 per machine,she will sell only five per week.The marginal benefit of selling the sixth ice-making machine is:

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

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