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158. Multiple Choice: Ian is such a big Braves fan that his...
Question Ian is such a big Braves fan that his benefit of seeing a Braves' 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 is destroyed. According to
marginal analysis, Ian should:
159. Multiple Choice: One of Jessuina's New Year's resoluti...
Question One of Jessuina's New Year's resolutions was to exercise more, so she bought an
annual membership to the local gym that allows unlimited visits with no additional
cost per visit. Unfortunately, the gym is so crowded and noisy that Jessuina leaves
every day with a headache. According to marginal analysis, Jessuina should:
160. Multiple Choice: Sunk costs:
Question Sunk costs:
161. Multiple Choice: After three years at an expensive col...
Question
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After three years at an expensive college, Pierre realizes that he doesn't want to
finish school but really wants to be a chef. When Pierre suggests that he leave
college for culinary school, his parents insist that he stay for one more year to get
his degree. Which of the following is true?
Answer Pierre's parents are correct: if he leaves college, it is as though he has wasted
three years of tuition.
162. Multiple Choice: Economists' and psychologists' attemp...
Question Economists' and psychologists' attempts to understand and explain why people
make decisions that appear to be irrational is the field of study called:
163. Multiple Choice: The purpose of behavioral economics i...
Question The purpose of behavioral economics is to determine why:
164. Multiple Choice: When a decision maker chooses the opt...
Question When a decision maker chooses the option leading to the outcome that he or she
most prefers, he or she has made a ________ decision.
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165. Multiple Choice: A rational economic decision:
Question A rational economic decision:
166. Multiple Choice: The decision to tip a waiter or waitr...
Question The decision to tip a waiter or waitress is:
167. Multiple Choice: The decision to give a birthday prese...
Question The decision to give a birthday present to a friend is:
Answer an example of decision making using bounded rationality.
168. Multiple Choice: When a decision maker makes a choice ...
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Question When a decision maker makes a choice that is close to but not exactly the one that
leads to the best possible economic outcome, he or she is:
169. Multiple Choice: When a decision maker makes a quick d...
Question When a decision maker makes a quick decision without taking the time to compare
the opportunity cost of all possible options, he is using:
170. Multiple Choice: The “good enough” method ...
Question The “good enough” method of decision making is also called:
171. Multiple Choice: Suppose Joan buys a new refrigerator ...
Question Suppose Joan buys a new refrigerator to replace her old one that suddenly quit
working. If Joan buys the model on closeout sale and doesn't take time to do
research on repair records and energy efficiency of various other models, she is
using:
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172. Multiple Choice: Which of the following is an example ...
Question Which of the following is an example of bounded rationality?
Answer Ann proofreads her term paper six times.
173. Multiple Choice: The willingness to sacrifice some eco...
Question The willingness to sacrifice some economic payoff in order to avoid a potential loss
is:
174. Multiple Choice: A person who is risk averse:
Question A person who is risk averse:
175. Multiple Choice: People are willing to buy insurance b...
Question People are willing to buy insurance because of
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176. Multiple Choice: If a decision maker chooses an option...
Question If a decision maker chooses an option that leaves him or her worse off than choosing
another available option, he or she is:
177. Multiple Choice: A decision maker who is irrational:
Question A decision maker who is irrational:
178. Multiple Choice: The habit of mentally assigning dolla...
Question The habit of mentally assigning dollars to different accounts so that some dollars are
worth more than others is:
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179. Multiple Choice: If a person engages in mental account...
Question If a person engages in mental accounting, he or she:
180. Multiple Choice: A person who is oversensitive to loss...
Question A person who is oversensitive to loss and is unwilling to recognize the loss and
move on suffers from
181. Multiple Choice: A person with loss aversion:
Question A person with loss aversion:
182. Multiple Choice: The tendency to avoid making a decisi...
Question The tendency to avoid making a decision is:
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183. Multiple Choice: Which of the following is a systemati...
Question Which of the following is a systematic mistake that leads to irrational decisions?
184. Multiple Choice: Which of the following is not a commo...
Question Which of the following is not a common mistake that leads to irrational decisions?
185. Multiple Choice: Joshua is tired of school and his par...
Question Joshua is tired of school and his part-time job and decides on the spur of the
moment to take a weekend trip to Cabo San Lucas. he pays for it with his credit
card rather than with money from his checking account. Which type of irrational
behavior does this represent?
186. Multiple Choice: Sally must submit a form to enroll in...
Question
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Sally must submit a form to enroll in her company's flexible medical benefits
program. Although she has been employed over a year, she has yet to complete the
form. Which type of irrational behavior does this represent?
187. Multiple Choice: If a star college quarterback turns d...
Question If a star college quarterback turns down a multi-million-dollar offer from the NFL to
return for his senior year of college, he may be exhibiting which of the following
types of irrational behavior?
188. Multiple Choice: Mary goes ahead and buys a new car be...
Question 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?
189. Multiple Choice: Cindy just graduated from college and...
Question Cindy just graduated from college 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 irrational behavior does this represent?
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190. Multiple Choice: Lucy bought some stock 10 years ago t...
Question Lucy bought some stock 10 years ago that has been priced at half of her purchase
price for the past 5 years. However, Lucy refuses to sell the stock, thinking that if
she waits long enough, she will recover her investment. What type of irrational
behavior does this represent?
191. Multiple Choice: Most economic models:
Question Most economic models:
192. Multiple Choice: Economic profits are calculated by:
Question Economic profits are calculated by:
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193. Multiple Choice: Wear and tear on machinery from usage...
Question Wear and tear on machinery from usage is:
194. Multiple Choice: Scenario: Betty's Cookie ShopBetty ru...
Question Scenario: Betty's Cookie Shop
Betty runs a cookie shop where she sells cookies for $1 each. In order to run the
business, she employs five people, each of whom worked a total of 500 hours last
year; she paid them a wage of $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 if she would come to work for them. She also
knows she could sell her cookie shop for $150,000. The bank in town currently pays
an annual interest rate of 3% on all funds deposited with it. Assume there is no
capital depreciation at this point.
Reference: Ref 9-18
(Scenario: Betty's Cookie Shop) Given the information provided, Betty's implicit
costs are:
195. Multiple Choice: Scenario: Betty's Cookie ShopBetty ru...
Question
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Scenario: Betty's Cookie Shop
Betty runs a cookie shop where she sells cookies for $1 each. In order to run the
business, she employs five people, each of whom worked a total of 500 hours last
year; she paid them a wage of $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 if she would come to work for them. She also
knows she could sell her cookie shop for $150,000. The bank in town currently pays
an annual interest rate of 3% on all funds deposited with it. Assume there is no
capital depreciation at this point.
Reference: Ref 9-18
(Scenario: Betty's Cookie Shop) Given the information provided, Betty's explicit
costs are equal to:
196. Multiple Choice: Scenario: Betty's Cookie ShopBetty ru...
Question Scenario: Betty's Cookie Shop
Betty runs a cookie shop where she sells cookies for $1 each. In order to run the
business, she employs five people, each of whom worked a total of 500 hours last
year; she paid them a wage of $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 if she would come to work for them. She also
knows she could sell her cookie shop for $150,000. The bank in town currently pays
an annual interest rate of 3% on all funds deposited with it. Assume there is no
capital depreciation at this point.
Reference: Ref 9-18
(Scenario: Betty's Cookie Shop) Given the information provided, Betty's implicit and
explicit costs are equal to:
197. Multiple Choice: Scenario: Betty's Cookie ShopBetty ru...
Question
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Scenario: Betty's Cookie Shop
Betty runs a cookie shop where she sells cookies for $1 each. In order to run the
business, she employs five people, each of whom worked a total of 500 hours last
year; she paid them a wage of $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 if she would come to work for them. She also
knows she could sell her cookie shop for $150,000. The bank in town currently pays
an annual interest rate of 3% on all funds deposited with it. Assume there is no
capital depreciation at this point.
Reference: Ref 9-18
(Scenario: Betty's Cookie Shop) Given the information provided, if Betty is trying to
decide at what point she should stop selling cookies and she knows she cannot
change the price of a cookie, then she should stop selling cookies if
198. Multiple Choice: If the marginal cost curve is upward ...
Question If the marginal cost curve is upward sloping, as output increases, marginal costs
will:
199. Multiple Choice: If marginal costs remain constant, th...
Question If marginal costs remain constant, the marginal cost curve is:
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200. Multiple Choice: As George eats pizza during one recen...
Question As George eats pizza during one recent outing, he finds that he enjoys each
additional slice less and less. This implies that his marginal benefit is:
201. Multiple Choice: If marginal costs of production are g...
Question If marginal costs of production are greater than marginal benefits of production:
202. Multiple Choice: Firms will continue to produce if:
Question Firms will continue to produce if:
203. Multiple Choice: Reference: Ref 9-19 (Table: TC's Piz...
Question
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Reference: Ref 9-19
(Table: TC's Pizza Parlor) Look at the table TC's Pizza Parlor. Assume that the
marginal cost is constant in intervals of production. The marginal cost of producing
one more slice of pizza if 10 slices are currently being produced is equal to:
204. Multiple Choice: Reference: Ref 9-19 (Table: TC's Piz...
Question
Reference: Ref 9-19
(Table: TC's Pizza Parlor) Look at the table TC's Pizza Parlor. Assume that the
marginal cost is constant in intervals of production. The marginal cost for pizza
production at TC's Pizza Parlor:
205. Multiple Choice: Reference: Ref 9-19 (Table: TC's Piz...
Question
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Reference: Ref 9-19
(Table: TC's Pizza Parlor) Look at the table TC's Pizza Parlor. Assume that the
marginal benefit is constant in intervals of production. Suppose five slices of pizza
are currently being produced. What is the marginal benefit of producing one more
slice of pizza?
206. Multiple Choice: Reference: Ref 9-19 (Table: TC's Piz...
Question
Reference: Ref 9-19
(Table: TC's Pizza Parlor) Look at the table TC's Pizza Parlor. Given the table, what
is the optimal number of pizza slices that should be produced?
207. Essay: Samantha is an artist who operates he...
Question
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Samantha is an artist who operates her studio and gallery in town. She produces
watercolor paintings in the studio and sells them in the gallery. Give an example of
an explicit and an implicit cost that Samantha is likely to incur.
208. Essay: Samantha quit her job teaching art at...
Question Samantha quit her job teaching art at the high school and is now an artist who
operates her studio and gallery in town. She produces watercolor paintings in the
studio and sells them in the gallery. Last year at the high school she was paid a
salary of $25,000. In the operation of her small business, she spent $30,000 on
supplies, $15,000 on utilities, and $12,000 on rent, and her equipment depreciated
by $3,000. How much revenue must Samantha receive so that she doesn't regret
quitting her job as a high school art teacher?
209. Essay: Businesses employ resources to use in...
Question Businesses employ resources to use in the production and sale of a good or
service. Accounting profit is typically used as a way of evaluating the success of a
business, but economists argue that economic profit is more relevant to determining
whether a business should continue to operate. What is the difference between
these two measures of profit? Explain why accounting profit is usually greater than
economic profit.
210. Essay: Some restaurants offer an “all-...
Question Some restaurants offer an “all-you-can-eat” buffet. Diners pay a flat fee to get a
plate, and then they can eat as much as they want without paying additional money.
Use marginal analysis to explain why even the hungriest of diners will eventually
stop eating.
211. Essay: Reference: Ref 9-17 (Table: Slices o...
Question
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Reference: Ref 9-17
(Table: Slices of Pizza) Look at the table Slices of Pizza. The table shows the total
cost incurred and total benefit received from consuming additional slices of pizza.
Complete the table and determine the optimal number of slices you should eat.
212. Essay: You can buy slices of pizza at $2.50 ...
Question You can buy slices of pizza at $2.50 each, and you have created a table that
summarizes your total cost and total benefit of purchasing up to five slices of pizza.
A coworker, looking over your shoulder, says that you should consume five slices of
pizza because the total benefit you receive is greatest at that quantity. How do you
respond? Is there any situation in which your coworker might be correct?
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213. Essay: You and a friend have each spent $8 o...
Question You and a friend have each spent $8 on a movie ticket. Ten minutes into the movie,
you both decide that the movie is horrible. Your friend says that you should stay and
watch the rest of the movie because you “should get your money's worth.” How do
you respond?
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