EC201 Exam Questions

Sunk costs are costs that are incurred

regardless of which decision is made.

Sunk costs should ____ be considered as part of the opportunity costs of a decision.

never

You have paid $100 for student season tickets to the football games at your university. It is halfway through the season, and the team has not won any games. You are considering whether you will attend any future games this season. All of the following are costs or benefits you should consider when making this decision EXCEPT the ____

$100 you spent on the season tickets.

It is a beautiful afternoon, and you are considering taking a leisurely stroll through the park. Your alternatives to walking are streaming a movie that you value at $5, taking a nap that you value at $7, or reading a new book that you value at $12. What is the opportunity cost to you of taking the stroll through the park?

$12

The opportunity cost of attending a movie instead of babysitting for your neighbor includes the...

Answers A, B and D are correct. cost of movie ticket and popcorn. lost income from not working, the time you spend driving to the movie

The term "gains from trade" means the

benefits that come from reallocating resources, goods, and services to better uses.

The key to using the cost-benefit principle is to think about _____ aspects of a decision.

both financial and nonfinancial

The marginal principle breaks quantity decisions into iterative decisions that use the

cost-benefit principle.

If Ilona wants to live her life based on comparative advantage, then she should

do for herself the things for which she has low opportunity cost and trade with others for things she has a high opportunity cost.

Charles McCoy is a manager at a coffee shop, and he has to decide how many workers to hire. One worker can make 20 drinks that sell for $4 on average in one hour. A second worker can make another 16 drinks in one hour. The marginal benefit of each additional worker decreases by four drinks, with each additional hire. Given that workers are paid $15 per hour and have eight-hour shifts, how many employees should Charles hire for each hour?

five

Asking "One more?" allows the _____ principle to be analyzed as a simple question.

marginal

When resources are organized according to the principle of comparative advantage, individuals become

more specialized so they can trade and end up with more of everything.

It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8. Because of the weather the surcharge is twice the regular cost, so the trip will cost $16. You should _____ because the benefit to you of taking the Uber is _____ than the cost.

take an Uber; more