micro econ test 1

Consider your decision to attend class each day or skip it. Which of the four core principles of economics applies to the notion that by attending class you are not doing the next best activity you would prefer to do, such as napping or going to the gym? a. Cost-benefit principle b. Opportunity cost principle c. Marginal principle d. Interdependence principle

A. Cost benefit

When you calculate marginal costs, they should include: a. only fixed costs. b. only variable costs. c. both the variable and fixed costs. d. the market price of the product.

B. Only variable costs

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, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost. A. walk; less b. walk; more c. take an Uber; less d. take an Uber; more

B.walk more

sunk costs are costs that a. are potential costs associated with a particular decision. b. are part of the opportunity costs of a decision. c. are incurred in the past and cannot be reversed. d. should be considered in any decision.

C.

Opportunity cost arises from the fundamental economic problem of a. interdependence. b. marginal costs. c. unlimited resources. d. scarcity.

D. Scarcity

if a seller expects prices to rise in the future

a. en the price rises.

sunk costs should _____ be considered as part of the opportunity costs of a decision

never

A large amount of harvested grain used to make flour grows mold due to flooding. How will this affect the supply of flour in the market? a. The supply of flour will increase in the market. b. The supply of flour will decrease in the market. c. The supply of flour will remain unchanged in the market. d. Suppliers of flour will switch to supplying grain.

B. The supply of flour will decrease in the market

In a voluntary economic transaction between a buyer and a seller, _____ can earn economic surplus from the transaction. a. only the buyer b. only the seller c. both the buyer and the seller d. neither the buyer nor the seller

C. Both the buyer and the seller

Rising input costs lead to a. decreased profitability for a seller. b. increased supply of the item in the market. c. rising marginal costs for a seller. d. lower opportunity costs of producing the item.

C. Rising marginal costs for the seller

the marginal principle says that decisions about quantities are best made a. incrementally b. arbitrarily c. all at once d. in total

A. Incrementally

Taryn is buying shirts online and has to decide how many shirts to buy. She should buy another shirt if the a. marginal benefit of the next shirt is less than the price of the shirt. b. marginal benefit of the next shirt is at least as high as the price of the shirt. c. total benefit when purchasing one more shirt is less than the total cost of the shirts. d. total benefit when purchasing one more shirt is at least as high as the total cost of the shirts.

B. Marginal benefit of the next shirt is at least as high as the price of the shirt

Substitutes-in-production a. are always priced the same. b. use substitute inputs in production. c. allows a business to have alternative uses of its resources by manufacturing other products using the same inputs. d. allows a business to produce goods together.

C. Allows a business to have alternative uses of its resources by manufacturing other products using the same inputs