Question 1

Expenses associated with factors of production may be:

Accepted Answer

A) implicit costs. 
B) opportunity costs. 
C) explicit costs. 
D) implicit costs, opportunity costs, or explicit costs.

Question 2

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 traveling.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:
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 traveling that must be deducted from the explicit cost of the trip.
D.$2,500, because the June rent is an opportunity cost of traveling and must be added to the explicit cost of the trip.

Accepted Answer

The answer of You have rented your first apartment, signing...

Question 3

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of irrational behavior does this represent?
A.status quo bias
B.overconfidence
C.misperception of opportunity
D.costs risk aversion

Accepted Answer

The answer of Mary goes ahead and buys a new...

Question 4

Suppose Eastland College does not have a summer program and could rent out the campus to various summer sports camps for $100,000.The potential revenue of the summer camps represents:
A.an implicit cost of capital.
B.an explicit cost.
C.a total cost.
D.a sunk cost.

Accepted Answer

The answer of Suppose Eastland College does not have a...

Question 5

In central Florida, the demand for real estate has been increasing rapidly for years.This reality, in combination with occasional freezes that kill orange trees, has led many orange grove owners to sell their land to real estate developers.Because of the freezes and land demand, the ________
cost of capital is in central Florida's orange groves.
A.explicit; decreasing
B.implicit; increasing
C.implicit; decreasing
D.explicit; increasing

Accepted Answer

The answer of In central Florida, the demand for real...

Question 6

Joan loves to eat sushi.Her first piece of sushi normally gives her a marginal benefit of $5.Each additional piece creates a marginal benefit that declines by $0.25 per piece.If her favorite sushi bar charges $2.75 per piece of sushi, how many pieces should she eat?
A.8
B.10
C.5
D.11

Accepted Answer

The answer of Joan loves to eat sushi.Her first piece...

Question 7

The "good enough" method of decision making is also called:
A.utility-maximizing behavior.
B.profit-maximizing behavior.
C.bounded rationality.
D.irrational decision making.

Accepted Answer

The answer of The "good enough" method of decision making...

Question 8

Total net gain is maximized when marginal benefit marginal cost.
A.is more than
B.is less than
C.is equal to
D.approaches

Accepted Answer

The answer of Total net gain is maximized when marginal...

Question 9

The is the amount by which an additional unit of activity increases its cost.
A.marginal cost
B.average cost
C.average profit
D.marginal benefit

Accepted Answer

The answer of The is the amount by which an...

Question 10

(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts.The marginal cost of the fourth sweatshirt is: 
A.$9.
B.$20.
C.$24.
D.$15.

Accepted Answer

The answer of   (Table: Marginal Cost of Sweatshirts)...

Question 11

In economics, maximization of the total net benefit of an activity occurs when:
A.MB = MC.
B.MB > MC.
C.MB < MC.
D.MB approaches MC.

Accepted Answer

The answer of In economics, maximization of the total net...

Question 12

Which of the following statements about opportunity cost is not true?
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 costs.

Accepted Answer

The answer of Which of the following statements about opportunity...

Question 13

Figure: The Marginal Cost Curve
(Figure: The Marginal Cost Curve) Look at the figure The Marginal Cost Curve.Using the marginal cost curve in the figure provided, the total cost of mowing five lawns is approximately:
A.$68.
B.$100.
C.$50.
D.$10.

Accepted Answer

The answer of Figure: The Marginal Cost Curve
(Figure: The Marginal...

Question 14

According to the optimal output rule, if the marginal benefit is:
A.more than the marginal cost, an activity should be increased.
B.less than the marginal cost, an activity should be increased.
C.equal to the marginal cost, an activity should be increased.
D.more than the marginal cost, net benefit is maximized.

Accepted Answer

The answer of According to the optimal output rule, if...

Question 15

Star athletes, singers, and actors often start their career very young, forgoing a college education.This is an example of poor decision making, since a college education provides benefits that will be invaluable later in their lives.

Accepted Answer

A) True 
 B)False

Question 16

(Table: Marginal and Total Benefit) Look at the table Marginal and Total Benefit.Sed is deciding how many football games he wants to attend this year.If the games are free, how many games should he attend?
A.1
B.5
C.7
D.8

Accepted Answer

The answer of (Table: Marginal and Total Benefit) Look at...

Question 17

(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts.The marginal cost of producing sweatshirts is an example of marginal costs.
A.decreasing
B.increasing
C.constant
D.random

Accepted Answer

The answer of (Table: Marginal Cost of Sweatshirts) Look at...

Question 18

-(Table: Tutoring) Look at the table Tutoring. At the optimal hours of tutoring, Sigmund's total net gain is:
A.$60.
B.$50.
C.$30.
D.$15.

Accepted Answer

The answer of 
-(Table: Tutoring) Look at the table Tutoring....

Question 19

Suppose Bob has a part-time business washing cars.He has washed nine cars on a given day; the marginal benefit of washing the tenth car is $20 and the marginal cost is $12.Bob should:
A.wash the tenth car.
B.not wash the tenth car.
C.increase his marginal benefit.
D.There is not enough information to decide.

Accepted Answer

The answer of Suppose Bob has a part-time business washing...

Question 20

Feng is thinking of mowing lawns over the summer.His friend Jason mows lawns, and he says the marginal cost of mowing the fourth lawn in a day is $40.Feng thinks about it and realizes that the total cost of mowing four lawns is:
A.$160.
B.$40.
C.$80.
not possible to determine from the information provided.

Accepted Answer

The answer of Feng is thinking of mowing lawns over...

Exam 9: Decision Making by Individuals and Firms

Expenses associated with factors of production may be:

Mary goes ahead and buys a new car because she expects to receive a 10% increase in her salary next year.What type of irrational behavior does this represent? A.status quo bias B.overconfidence C.misperception of opportunity D.costs risk aversion

Suppose Eastland College does not have a summer program and could rent out the campus to various summer sports camps for $100,000.The potential revenue of the summer camps represents: A.an implicit cost of capital. B.an explicit cost. C.a total cost. D.a sunk cost.

Joan loves to eat sushi.Her first piece of sushi normally gives her a marginal benefit of $5.Each additional piece creates a marginal benefit that declines by $0.25 per piece.If her favorite sushi bar charges $2.75 per piece of sushi, how many pieces should she eat? A.8 B.10 C.5 D.11

The "good enough" method of decision making is also called: A.utility-maximizing behavior. B.profit-maximizing behavior. C.bounded rationality. D.irrational decision making.

Total net gain is maximized when marginal benefit marginal cost. A.is more than B.is less than C.is equal to D.approaches

The is the amount by which an additional unit of activity increases its cost. A.marginal cost B.average cost C.average profit D.marginal benefit

(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts.The marginal cost of the fourth sweatshirt is: A.$9. B.$20. C.$24. D.$15.

In economics, maximization of the total net benefit of an activity occurs when: A.MB = MC. B.MB > MC. C.MB < MC. D.MB approaches MC.

Figure: The Marginal Cost Curve (Figure: The Marginal Cost Curve) Look at the figure The Marginal Cost Curve.Using the marginal cost curve in the figure provided, the total cost of mowing five lawns is approximately: A.$68. B.$100. C.$50. D.$10.

Star athletes, singers, and actors often start their career very young, forgoing a college education.This is an example of poor decision making, since a college education provides benefits that will be invaluable later in their lives.

(Table: Marginal and Total Benefit) Look at the table Marginal and Total Benefit.Sed is deciding how many football games he wants to attend this year.If the games are free, how many games should he attend? A.1 B.5 C.7 D.8

(Table: Marginal Cost of Sweatshirts) Look at the table Marginal Cost of Sweatshirts.The marginal cost of producing sweatshirts is an example of marginal costs. A.decreasing B.increasing C.constant D.random

-(Table: Tutoring) Look at the table Tutoring. At the optimal hours of tutoring, Sigmund's total net gain is: A.$60. B.$50. C.$30. D.$15.