Chapter 1

The cost-benefit principle states that a decision should be a)pursued only if the benefits are positive b)costs are greater than the benefits c)costs are negative d)benefits are greater than the costs

d)benefits are greater than the costs

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

d)incrementally.

The opportunity cost principle states that the true cost of something is the a)economic surplus you give up to get it. b)economic surplus you receive from getting it. c)lease desired alternative you have to give up to get it. d)next best alternative you have to give up to get it.

d)next best alternative you have to give up to get it.

Diane is 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 a)between her own choices. b)through time. c)between people or businesses in the same market. d)between markets.

a)between her own choices.

You paid $100 for student season tickets to the basketball games at URI. It's 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 a)frustration experienced from watching the team lose in previous games. b)cost of food and drinks you will inevitably buy a future game. c)time spent at the game rather than studying. d)$5 you will earn per game by selling the remaining tickets.

a)frustration experienced from watching the team lose in previous games.

Sunk costs are costs that are incurred a)regardless of which decision is made. b)only for some decisions. c)if a particular decision is made. d)if a particular decision is not made.

a)regardless of which decision is made.

It's a rainy night and you are considering whether to walk or take an Uber to meet your friends. You are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost $8, but because of the rain the Uber ride will cost twice as much as normal. You should _____ because the benefit to you of taking the Uber is ______ than the cost. a)take the Uber; more b)take the Uber; less c)walk; less d)walk; more

a)take the Uber; more

The marginal cost of an additional work is a)the additional cost of hiring one more worker. b)the total cost of all workers hired divided by the number of workers hired. c)always equal to the cost from the first worker hired. d)always equal to the benefit of hiring the additional worker.

a)the additional cost of hiring one more worker.

Economists convert costs and benefits into money equivalents by evaluating an individual's a)willingness to pay b)opportunity costs c)marginal benefits d)sunk costs

a)willingness to pay

It's a beautiful afternoon, and you are considering spending it at the beach. Your alternatives 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 spending the afternoon at the beach? a)$5 b)$12 c)$0 d)$7

b)$12

Vince makes tables and is trying to decide how many to produce. He can sell each table for $2,000. The cost of producing the first table is $750, $1,000 for the second, $1,250 for the third, and so on. In other words, for each additional table he produces, the marginal cost of each table increases by $250. How many tables should he produce, and what is the total cost of his production? a)4 tables; $4,500 b)5 tables; $6,250 c)6 tables; $8,250 d)7 tables; $10,500

c)6 tables; $8,250

You are planning on studying late into the night for your exam tomorrow. How many cups of coffee should you buy tonight? You should keep buying coffee until the marginal a)benefit of purchasing one more coffee is just less than the marginal cost. b)benefit of purchasing one more coffee is positive. c)benefit of purchasing one more coffee equals the marginal cost. d)cost of purchasing one more coffee is positive.

c)benefit of purchasing one more coffee equals the marginal cost.

Henry is an engineer and has the option to work as a petroleum engineer or design rollercoasters after college. He thinks many engineers would prefer to design rollercoasters and expects a lower salary in this field. He is acknowledging the dependencies that exist a)through time. b)between markets. c)between people or businesses in the same market. d)between his own choices.

c)between people or businesses in the same market.

Nerida Kyle can either commute to work using a bus or purchase a new car. The bus far each way is $2. Nerida works 5 days a week for 50 weeks a year. Based solely on the benefit of avoiding the cost of her bus tickets, Nerida should purchase a car if the cost of the car is _______ than _______ per week a)greater; $20 b)less; $10 c)less; $20 d)greater; $20

c)less; $20

Economic surplus is maximized when a)marginal benefits exceed marginal costs. b)total benefits exceed total costs. c)marginal benefits equal marginal costs. d)total benefits equal total costs.

c)marginal benefits equal marginal costs.