Deck 1: Thinking Like an Economist

Question 1

An implication of scarcity is that:

A) people will never be happy.
B) making trade-offs becomes unnecessary as wealth increases.
C) some people will always be poor.
D) people must make trade-offs.

Answer 1

people must make trade-offs.

Question 2

Forest lives in complete isolation in Montana. He is self-sufficient and feeds himself through hunting, fishing, and farming. Which of the following statements about Forest is true?

A) Forest has unlimited resources.
B) Forest is not required to make trade-offs because he is self-sufficient.
C) Forest has to make trade-offs.
D) Forest doesn't have to consider costs and benefits.

Answer 2

Forest has to make trade-offs.

Question 3

According to the Cost-Benefit Principle, you should spend an additional hour studying for an exam if, and only if,:

A) the benefits of studying for an additional hour are really high.
B) the benefits of studying for an additional hour exceed the costs of studying for an additional hour.
C) the benefits of studying for an additional hour are higher for you than for anyone else in your class.
D) you have time to study for an additional hour.

Answer 3

the benefits of studying for an additional hour exceed the costs of studying for an additional hour.

Question 4

A rational person is someone:

A) who does not have well-defined goals.
B) with well-defined goals who tries to fulfill those goals as best as he or she can.
C) who doesn't worry about costs and benefits.
D) who only considers the financial benefits and financial costs of making a choice.

Question 5

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending State College is:

A) $35,000
B) $30,000
C) $20,000
D) $15,000

Question 6

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending Elite U is:

A) $70,000
B) $50,000
C) $20,000
D) $15,000

Question 7

According to the Cost-Benefit Principle, you should go see the latest Star Wars movie with your friends this week-end if:

A) the benefits of seeing the movie are greater than the costs of seeing the movie.
B) you really like Star Wars.
C) you can afford to go to the movies.
D) you have a free ticket.

Question 8

Economics is the study of:

A) the financial concerns of businesses and individuals.
B) the role of government in limiting the choices people make.
C) choice in the face of limited resources.
D) whether we will have enough resources in the future.

Question 9

Janie must choose to either mow the lawn or wash clothes. If she mows the lawn, she will earn $30, and if she washes clothes, she will earn $45. She dislikes both tasks equally and they both take the same amount of time. Janie will therefore choose to ______ because it generates a ______ economic surplus.

A) mow the lawn; bigger
B) wash clothes; bigger
C) mow the law; smaller
D) wash clothes; smaller

Question 10

Whether studying the output of the U.S. economy or how many classes a student will take, a unifying concept is that:

A) wants are limited and resources are unlimited, so trade-offs are unnecessary.
B) wants are unlimited and resources are scarce, so trade-offs have to be made.
C) wants are limited and resources are unlimited, so trade-offs have to be made.
D) both wants and resources are unlimited.

Question 11

Suppose the cost to Tim of a third glass of soda is zero because he's at a restaurant that gives free refills. According to the Cost-Benefit Principle Tim should:

A) drink a third glass of soda.
B) drink a third glass of soda if the benefit of doing so is positive.
C) drink a third glass of soda if his benefit from drinking his second glass of soda was positive.
D) not drink a third glass of soda.

Question 12

The Cost-Benefit Principle indicates that an action should be taken if, and only if:

A) its benefits are positive.
B) its costs are small.
C) its benefits are a result of its costs.
D) its benefits exceed its costs.

Question 13

Economics is best defined as the study of:

A) inflation, interest rates and the stock market.
B) supply and demand.
C) how people make choices in the face of scarcity and the implications of those choices for society as a whole.
D) the financial concerns of businesses and individuals.

Question 14

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry's opportunity cost of attending State NoName U is:

A) $60,000
B) $30,000
C) $20,000
D) $15,000

Question 15

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. Larry maximizes his economic surplus by attending:

A) Elite U.
B) State College.
C) NoName U because he has a full scholarship there.
D) NoName U because the annual cost is only $20,000.

Question 16

Larry was accepted at three different graduate schools, and must choose one. Elite U costs $50,000 per year and did not offer Larry any financial aid. Larry values attending Elite U at $60,000 per year. State College costs $30,000 per year, and offered Larry an annual $10,000 scholarship. Larry values attending State College at $40,000 per year. NoName U costs $20,000 per year, and offered Larry a full $20,000 annual scholarship. Larry values attending NoName at $15,000 per year. What is Larry's economic surplus from attending State College instead of his next best alternative?

A) $40,000
B) $20,000
C) $10,000
D) $5,000

Question 17

Dean should play golf instead of preparing for tomorrow's exam in economics if:

A) he is irrational.
B) the benefit of golfing is greater than the benefit of studying.
C) the economic surplus from playing golf is greater than the economic surplus from studying.
D) Dean can play golf for free.

Question 18

Economists recognize that because people have limited resources:

A) government intervention is necessary.
B) they have to make trade-offs.
C) they will never be happy.
D) our future is bleak.

Question 19

Chris has a one-hour break between classes every Wednesday. Chris can either stay at the library and study or go to the gym and work out. The decision Chris must make is:

A) not an economic problem because neither activity costs money.
B) not an economic problem because it's an hour that Chris has no matter what he does.
C) an economic problem because the tuition Chris pays covers the cost of both the gym and the library.
D) an economic problem because Chris has only one hour, and engaging in one activity means giving up the other.

Question 20

If all the world's resources were to magically increase one hundredfold, then:

A) people would still have to make trade-offs.
B) economics would no longer be relevant.
C) scarcity would disappear.
D) trade-offs would become unnecessary.

Question 21

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. Should you use the frequent flyer coupon to go to Miami?

A) Yes, your benefit is more than your cost.
B) No, your benefit is less than your cost.
C) Yes, your benefit is equal to your cost.
D) No, because there are no benefits in the trip.

Question 22

The economic surplus of an action is:

A) the benefit gained by taking an action.
B) the difference the explicit and implicit costs of taking an action.
C) the difference between the benefit and the cost of taking an action.
D) the money a person has left over after taking an action.

Question 23

Suppose the most you would be willing to pay for a plane ticket home is $250. If you buy one for $175, then your economic surplus is:

A) $250.
B) $175.
C) $75.
D) $0.

Question 24

Suppose Mary is willing to pay up to $15,000 for a used Ford pick-up truck. If she buys one for $12,000, her ______ would be ______.

A) benefit; $12,000
B) cost; $15,000
C) economic surplus; $3,000
D) economic surplus; $12,000

Question 25

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. If you do not use the frequent-flyer coupon to fly to Miami, should you go to Miami?

A) Yes, your benefit is more than your cost.
B) No, your benefit is less than your cost.
C) Yes, your benefit is equal to your cost.
D) No, because there are no benefits in the trip.

Question 26

If one fails to account for implicit costs in decision making, then applying the cost-benefit rule will be flawed because:

A) the benefits will be overstated.
B) the costs will be understated.
C) the benefits will be understated.
D) the costs will be overstated.

Question 27

You are trying to decide whether to purchase the latest Harry Potter book online or borrow it from the library. There is no charge for borrowing a book from the library, but going to the library takes more time than ordering a book online. Regardless of how you get the book, its benefit to you is the same. If the cost of buying the book online is $13, then you should:

A) borrow the book from the library because you can get it from the library for free.
B) borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is less than $13.
C) borrow the book from the library if the cost of doing so (in terms of the extra time it takes) is greater than $13.
D) buy the book online because it takes less time.

Question 28

Amy is thinking about going to the movies tonight. A movie ticket costs $15, and she'll have to cancel a $20 dog-sitting job that she would have been willing to do for free. The opportunity to Amy cost of going to the movies is:

A) $5.
B) $15.
C) $20.
D) $35

Question 29

All else equal, relative to a person who earns minimum wage, a person who earns $30 per hour has:

A) a higher opportunity cost of working an additional hour.
B) a higher opportunity cost of taking the day off work.
C) a lower opportunity cost of driving farther to work.
D) the same opportunity cost of spending time on leisure activities.

Question 30

The Cost-Benefit Principle:

A) fully captures how people choose between alternatives.
B) provides an abstract model of a rational person should choose between alternatives.
C) describes how people behave once they have enough education.
D) provides little insight into how people actually chose between alternatives.

Question 31

Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie. Her opportunity cost of going to the beach is:

A) the $12 she spent on the umbrella, food and drinks.
B) only $0 because she would have spent $12 to go to the movie.
C) the value she places on seeing the movie.
D) the value she places on seeing the movie plus the $12 she spent on the umbrella, food and drinks.

Question 32

Economists use abstract models because:

A) every economic situation is unique, so it is impossible to make generalizations.
B) every economic situation is essentially the same, so specific details are unnecessary.
C) they are useful for describing general patterns of behavior.
D) computers have allowed economists to develop abstract models.

Question 33

Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books and supplies. If Alex becomes a full-time student, then:

A) attending State U. for four years is costless for Alex.
B) Alex has no incentive to study hard while at State U.
C) the opportunity cost of attending State U. includes the money Alex could have earned working for four years.
D) the opportunity cost of attending State U. includes the sum of the benefits Alex would have had from attending each of the other schools to which he was admitted.

Question 34

Moe has a big exam tomorrow. He considered studying this evening, but decided to hang out with Curly instead. If neither activity involves any explicit costs, and Moe always chooses rationally, then it must be true that:

A) the opportunity cost of studying is greater than the value Moe gets from spending time with Curly.
B) the opportunity cost of studying is less than the value Moe gets from spending time with Curly.
C) Moe gets more benefit from spending time with Curly than from studying.
D) Moe gets less benefit from spending time with Curly than from studying.

Question 35

The fact that most people make some decisions based on intuition rather than calculation is:

A) irrational, because intuition is usually wrong.
B) consistent with the cost-benefit model because calculating costs and benefits is irrational.
C) consistent with the cost-benefit model because most people intuitively weigh costs and benefits.
D) inconsistent with the cost-benefit model, but still rational.

Question 36

The opportunity cost of an activity includes the value of:

A) all of the alternatives that must be forgone.
B) the next-best alternative that must be foregone.
C) the least-best alternative that must be foregone.
D) the chosen activity minus the value of the next-best alternative.

Question 37

The cost-benefit model used by economists is:

A) unrealistic because it is too detailed and specific to apply to most situations.
B) unrealistic because everyone can think of times when he or she violated the principle.
C) useful because everyone follows it all of the time.
D) useful because most people follow it most of the time.

Question 38

Economists believe the Cost-Benefit Principle is:

A) a simple but useful model of how people should make choices.
B) a comprehensive description all the factors that influence people's choices.
C) an interesting intellectual exercise with little applicability to the real world.
D) of little use to those who wish to learn how to make better decisions.

Question 39

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450.What is the opportunity cost of using the coupon for the Miami trip?

A) $100
B) $450
C) $500
D) $550

Question 40

If individuals are rational, they should choose actions that yield the:

A) largest total benefits.
B) smallest total costs.
C) smallest economic surplus.
D) largest economic surplus.

Question 41

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your average cost for a meal is:

A) $6.
B) $5.
C) $4.
D) $0.25.

Question 42

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. Your economic surplus from going to work instead of seeing SPAM on Saturday is:

A) $0
B) $1
C) $35
D) $36

Question 43

The marginal benefit of an activity is the:

A) same as the total benefit of an activity.
B) total benefit of an activity divided by the level of the activity.
C) extra benefit associated with an extra unit of the activity.
D) total benefit associated with an extra unit of the activity.

Question 44

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average cost for a meal is:

A) $6.
B) $5.
C) $4.
D) $0.25.

Question 45

Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly $900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450. If the Chicago-Atlanta round-trip air fare were $350, should you use the coupon to go to Miami?

A) No, your economic surplus would be −$50.
B) No, your economic surplus would be −$100.
C) Yes, your economic surplus would be $50.
D) Yes, your economic surplus would be $400.

Question 46

The extra cost that results from carrying out one additional unit of an activity is the _____ of the activity.

A) marginal benefit
B) marginal cost
C) reservation cost
D) opportunity cost.

Question 47

The marginal cost of an activity is the:

A) change in the total cost of the activity that results from carrying out an additional unit of the activity.
B) the total cost of the activity divided by the change in the level of the activity.
C) the total cost of the activity divided by the level of the activity.
D) change in the level of the activity divided by the change in the cost of the activity.

Question 48

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. Should you go to the concert instead of working Saturday?

A) Yes, the benefit of going to the concert is more than the cost.
B) No, the benefit of going to the concert is less than the cost.
C) Yes, the benefit of going to the concert is equal to the cost.
D) No, because there are no benefits of going to the concert.

Question 49

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16.Given that driving to campus to buy the concert ticket was rational for Matt, Matt should:

A) not drive to campus to buy the books because the $5 he would save is only two percent of the cost of the books, and that is much less than the 25 percent he saved on the concert ticket.
B) drive to campus to buy the books because the books are cheaper at the bookstore than online.
C) drive to campus to buy the books because the $5 he would save is more than he saved by driving to campus to buy the concert ticket.
D) not drive to campus to buy the books because the cost of gas and his time must certainly be more than the $5 he would save.

Question 50

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. What is the opportunity cost of going to the concert?

A) $1
B) $9
C) $35
D) $36

Question 51

For the Fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100^th meal is:

A) $6.
B) $4.
C) $0.25.
D) $0.

Question 52

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. Assume the minimum that Matt would be willing to accept to drive to campus is equal to the $4 he saved on the concert ticket. What would his economic surplus be if he bought his textbooks at the university bookstore rather than online?

A) $5
B) $1
C) $50
D) $20

Question 53

The average benefit of n units of an activity is the:

A) total benefit of n units divided by n.
B) n divided by the total benefit of n units.
C) n times the total benefit of n units.
D) extra benefit from carrying out one additional unit of the activity.

Question 54

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. The benefit to Matt of buying his books at the university bookstore instead of online is:

A) $5
B) $9
C) $170
D) $175

Question 55

Pat earns $25,000 per year (after taxes), and Pat's spouse, Chris, earns $35,000 (after taxes). They have two pre-school-aged children. Childcare for their children costs $12,000 per year. Given that Chris doesn't want to stay home with the kids, regardless of what Pat does, Pat should stay home with the kids if, and only if, the value of Pat spending more time with the kids is greater than:

A) $37,000 per year.
B) $25,000 per year.
C) $13,000 per year.
D) $12,000 per year.

Question 56

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16.The benefit to Matt of driving to campus to buy the concert ticket last week was:

A) $2
B) $4
C) $9
D) $16

Question 57

Suppose the total benefit of watching 1 baseball game is 100, the total benefit of watching 2 games is 120, and the total benefit of watching 3 games is 125. In this case, the marginal benefit of watching the 3^rd game is:

A) 125
B) 5
C) 41.67
D) 375

Question 58

The extra benefit that results from carrying out one additional unit of an activity is the ______ of the activity.

A) marginal benefit
B) total benefit
C) average benefit
D) economic benefit

Question 59

You paid $35 for a ticket (which is non-refundable) to see SPAM, a local rock band, in concert on Saturday. Assume that $35 is the most you would have been willing to pay for a ticket. Your boss called, and she is looking for someone to cover a shift on Saturday at the same time as the concert. You would have to work 4 hours and she would pay you $11/hr. The psychic cost to you of working is $2/hr. What is your opportunity cost of going to work on Saturday?

A) $0
B) $9
C) $35
D) $36

Question 60

Dividing the total cost of n units of an activity by n reveals the:

A) average benefit.
B) marginal cost.
C) units per cost.
D) average cost.

Question 61

Refer to the table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out?

A) 1
B) 3
C) 4
D) 6

Question 62

Ginger bought a phone that came with a $10 rebate. Ginger should fill out and mail in the rebate form if:

A) the opportunity cost of the time and trouble of sending in the rebate form is less than $10.
B) the opportunity cost of the time and trouble of sending in the rebate form is more than $10.
C) she would have bought the phone without the rebate, and so sending in the rebate form involves no opportunity cost.
D) Ginger's surplus from purchasing the phone was less than $10.

Question 63

Refer to the table below. The marginal benefit of the 6^th unit of activity is:

A) $1
B) $2
C) $4
D) $7

Question 64

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The total labor cost with 4 employees is:

A) $21,500.
B) $22,000.
C) $38,000.
D) $43,121.

Question 65

Refer to the table below. The average benefit of 2 units of activity is:

A) $80
B) $60
C) $40
D) $20

Question 66

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The marginal benefit (in terms of extra donations) of the 2^nd employee is:

A) $42,426.
B) $21,213.
C) $12,426.
D) $11,337.

Question 67

Your scholarship depends on your maintaining a 3.5 cumulative GPA. Your GPA for last semester was 3.6, which brought your cumulative GPA down. What must be true?

A) Last semester's grades were higher than your overall GPA.
B) Last semester's grades were lower than your overall GPA.
C) If this semester's grades are the same as last semester's, your overall GPA will stay the same.
D) If this semester's grades are the same as last semester's, you might lose your scholarship.

Question 68

Refer to the table below. The marginal benefit of the 5^th unit of activity is:

A) $50
B) $44
C) $10
D) $5

Question 69

Refer to the table below. The marginal cost of the 3^rd unit of this activity is:

A) $30
B) $25
C) $20
D) $10

Question 70

You save $10 on gas every week because you take the bus to school. You have class 5 days a week. What is your average benefit per day of taking the bus to school?

A) $10
B) $5
C) $2
D) $0

Question 71

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The President of State U decides to hire fundraising employees as long as their average benefit exceeds their average cost. This results in ______ employees being hired and a net benefit (total donations minus total labor costs) of ______.

A) 5; $17,080
B) 5; $67,080
C) 4; $60,000
D) 4; $22,000

Question 72

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The marginal cost of the 4^th employee is:

A) $9,500.
B) $10,750.
C) $11,000.
D) $13,000.

Question 73

Refer to the table below. The marginal cost of the 4^th unit of activity is:

A) $5
B) $6
C) $8
D) $10

Question 74

Refer to the table below. The average benefit of 4 units of activity is:

A) $4
B) $5
C) $9
D) $10

Question 75

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The total value of donations raised by three employees is:

A) $43,899.
B) $45,000.
C) $48,911.
D) $51,963.

Question 76

Refer to the table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out?

A) 2
B) 3
C) 4
D) 5

Question 77

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The Chair of the Economics Department at State U says that fundraising employees should be hired as long as their marginal benefit exceeds their marginal cost. If the University follows this advice, then ______ employee(s) will hired, and the net benefit (total donations minus total labor costs) will be ______.

A) 1; $22,000
B) 2; $25,426
C) 3; $25,426
D) 2; $3,476

Question 78

Refer to the table below. The average cost of 4 units of this activity is:

A) $20
B) $25
C) $30
D) $40

Question 79

The table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The net benefit of hiring fundraisers is largest when ______ employees are hired.

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

Question 80

Refer to the table below. The average cost of 5 units of activity is:

A) $4
B) $6
C) $8
D) $10