ECON QUiZ 1.4, 1.5, 1.7

The price of coffee at a local coffee shop is $2.50. Cheryl is willing to pay $8 for her first cup of coffee each day. The marginal benefit to her of each additional cup of coffee falls by $2. How many cups of coffee should Cheryl purchase? one two three four

three

Your employer has asked you to start working overtime and has offered to pay $18 per hour for every hour you work beyond forty hours a week. The wage rate for each of the first forty hours will continue to be the usual $15 per hour. In terms of dollars, what is the marginal benefit of working each hour of overtime? $3 $18 Depends on the opportunity cost of your time $15

$18

The cost of your favorite coffee is $6.50 per cup at the coffee shop. The marginal cost of each cup you drink is _____. The first cup of coffee you drink gives you a marginal benefit of $8. The marginal benefit from the second cup is $6, $4 from the third, $2 from the fourth, and $0 from the fifth. You should drink _____ of coffee. $6.50; one cup $0; five cups $1; six cups $1; five cups

$6.50; one cup

What do economists mean when they say behavior is "rational"? Individuals making choices that do not harm others. Individuals making choices which help them reach their goals. Individuals making choices entirely using logic. Individuals caring more about their own outcomes than others' outcomes. Individuals making choices to maximize their wealth.

Individuals making choices which help them reach their goals.

Economic models are typically based on the principle that people behave rationally. However, people do not always behave rationally. Which of the statements is NOT a reason why economists still consider their models valid, in spite of the irrationality of people? - Models are made to simplify understanding, and irrational behavior is more difficult to generalize. - Despite the flaws, the models are still fairly accurate at predicting behavior. - People typically behave rationally in general. - The existing models have been in place for so long, they are considered untouchable, the equivalent of an economic law.

The existing models have been in place for so long, they are considered untouchable, the equivalent of an economic law.

In economics, what is meant by "optimal decisions are made at the margin?" - The idea of the margin does not help compare trade-offs and is not relevant to decision-making. - The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior. - The concept of the margin was initially developed in 2012 by Professor Marginus; research is still being done on how it can be used for decision-making. - The idea of the margin is that all economic decisions are made at the very fringes of society.

The idea of the margin is related to making decisions while thinking about the benefits and costs of small changes in behavior.

Which phrase best describes utility? Utility is a measure of consumer satisfaction. a measure of how useful a good or service is in acquiring income or wealth for a consumer. the contribution of a particular good or service to GDP. the amount of money a consumer is willing to pay to gain a given amount of consumption.

a measure of consumer satisfaction.

Instead of studying for an additional two hours for the economics final, Leann decides to watch a movie. Leann is making. - a decision that is not on the margin because she will see the entire movie. - an irrational decision because studying is more important than watching a movie. - a rational decision if her marginal cost from the movie is greater than her marginal benefit. - a decision based on stated preference, rather than revealed preference. - a rational decision if her marginal benefit from the movie is greater than her marginal cost.

a rational decision if her marginal benefit from the movie is greater than her marginal cost.

Kathleen is binge-watching her favorite show on Netflix. She is trying to decide how many more episodes to watch. Kathleen should continue watching episodes until the marginal: - benefit of watching another episode exceeds the marginal cost. - benefit of watching another episode is equal to the marginal cost. - benefit of watching another episode is positive. - cost of watching another episode is positive.

benefit of watching another episode is equal to the marginal cost.

Diane is a student studying economics and currently working on her class schedule for next semester. When she considers taking another economics course rather than taking a math class in the same time slot, she is acknowledging that dependencies exist: between her own choices. between people or businesses in the same market. between markets. through time.

between her own choices.

How do economists measure utility? do not measure utility. It is a hypothetical measure used for modeling behavior. measure utility in a laboratory by analyzing the responses of volunteers. use data such as prices and purchase information to measure utility. use surveys to rate the usefulness of goods and services after they are purchased.

do not measure utility. It is a hypothetical measure used for modeling behavior.

Economists assume that rational behavior is useful in explaining choices people make even though people rarely, if ever, behave in a rational manner. even though people may not behave rationally all the time. because individuals act rationally all the time in all circumstances. because irrational people do not make economic choices.

even though people may not behave rationally all the time.

Marginal utility is the satisfaction achieved when a consumer has had enough of a product. total satisfaction received from consuming a given number of units of a product. extra satisfaction received from consuming one more unit of a product. average satisfaction received from consuming a product.

extra satisfaction received from consuming one more unit of a product.

An item has utility for a consumer if it has a high price. generates enjoyment or satisfaction. is scare. is something everyone wants.

generates enjoyment or satisfaction.

The principle that your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future is known as the _____ principle. cost-benefit opportunity cost marginal interdependence

interdependence

Economists assume that people's goals are to make as much money as possible. do the minimum amount of work needed to survive. make themselves as well off as possible. spend all of their income.

make themselves as well off as possible.

Ron is buying jeans online and has to decide how many to buy. He should buy an additional pair if the: - marginal benefit of the next pair is less than the price of the jeans. - marginal benefit of the next pair is at least as high as the price of the jeans. - total benefit when purchasing one more pair is less than the total cost of the jeans. - total benefit when purchasing one more pair is at least as high as the total cost of the jeans.

marginal benefit of the next pair is at least as high as the price of the jeans.

When faced with a quantity decision, the economic surplus stops increasing when: - total benefits equal to total costs. - total benefits exceed total costs. - marginal benefits equal marginal costs. - marginal benefits exceed marginal costs.

marginal benefits equal marginal costs.

Harry is an engineering student taking an economics elective in his senior year. He has the option to work as a petroleum engineer or to design rollercoasters after college. He uses concepts from his economics course to help with this decision. When he considers the increasing popularity of electronic vehicles and a decrease in demand for petroleum in the future, he is acknowledging the dependencies that exist: between his own choices. between people or businesses in the same market. between markets. over time.

over time

The interdependence principle states that your best choice today depends on all of these EXCEPT: past decisions you have made. expectations about the future. other decisions you are currently making. decisions others are currently making.

past decisions you have made.

Economic models do all of the following except make economic ideas explicit and concrete. portray reality in all its details. simplify some aspect of economic life. answer economic questions.

portray reality in all its details.

The marginal benefit from an additional worker is: - the additional benefit from hiring one more worker. - the total benefit from all workers hired. - always equal to the benefit from the first worker hired. - always equal to the cost of hiring the additional worker.

the additional benefit from hiring one more worker.

The marginal cost of an additional worker is: - always equal to the cost from the first worker hired. - always equal to the benefit of hiring the additional worker. - the total cost of all workers hired. - the additional cost of hiring one more worker.

the additional cost of hiring one more worker.

Utility is the measure of the satisfaction all consumers should receive from consuming a good or service. surplus lost by producers when taxes are introduced to the market. the satisfaction a good or service gives to the consumer. surplus lost by consumers when taxes are introduced to the market.

the satisfaction a good or service gives to the consumer.

When people make rational choices, they behave selfishly. do not consider their emotions. weigh the costs and benefits of their options and act to satisfy their wants. are necessarily making the best decision.

weigh the costs and benefits of their options and act to satisfy their wants.

Dependencies between your own choices reflect the fact that: you have limited resources. society has limited resources. resources are spread across varying markets. resources can be spread across time.

you have limited resources