ECON2105 Chapter 1 quiz

Kevin Williamson goes to a local coffee shop and orders a medium-sized latte. His willingness to pay for that latte is $6. The price of the latte is $2. The cost to the coffee shop to produce the latte is $1. How much economic surplus does Kevin gain when he purchases the latte? - $1 - $2 - $6 - $4

$4

How is the economic surplus generated by a decision calculated? - It is the sum of benefits arising from the decision. - It is the total benefits minus total costs arising from the decision. - It is the total benefits plus total costs arising from the decision. - It is the sum of costs arising from the decision.

It is the total benefits minus total costs arising from the decision.

Which principle tells you that the true cost of something is the next best alternative you have to give up to get it? - The cost-benefit principle. - The opportunity cost principle. - The interdependence principle. - The marginal principle

The opportunity cost principle.

Joshua Murphy is planning on studying late into the night for his economics exam. How many cups of coffee should he buy tonight? Joshua should keep buying coffee throughout the evening until the marginal: -benefit of purchasing one more coffee is positive. -benefit of purchasing one more coffee is less than the marginal cost. -cost of purchasing one more coffee is positive. -benefit of purchasing one more coffee equals the marginal cost.

benefit of purchasing one more coffee equals the marginal cost.

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is attempting to decide how many more episodes to watch. Kathleen should continue watching episodes as long as the marginal: -benefit of watching another episode is less than the marginal cost. -cost of watching another episode is positive. -benefit of watching another episode exceeds the marginal cost. -benefit of watching another episode is positive.

benefit of watching another episode exceeds the marginal cost.

The key to using the cost-benefit principle is to think about _____ aspects of a decision. - both financial and nonfinancial - neither financial nor nonfinancial - only financial - only nonfinancial

both financial and non financial

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

both the buyer and the seller

The cost-benefit principle states that _____ are the incentives that shape decisions. - costs and benefits - framing effects - opportunity costs - incomes

costs and benefits

According to the marginal principle, keep increasing quantity until the marginal benefit of an additional item is _____ the marginal cost of an additional item. -greater than -equal to -greater than or less than -less than

equal to

You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost. - not go; greater - go; greater - go; less - not go; less

go; greater

Jonathan Mendez is deciding whether to study for his economics exam at a café down the street or go to a concert a few cities over. The time spent commuting to the concert is ____ in his opportunity cost calculations and represents a _____ cost. - included; nonfinancial - not included; sunk - included; financial - not included; financial

included; nonfinancial

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. -marginal -opportunity cost -cost-benefit -interdependence

interdependence

Nerida Kyle could either commute to work via Uber or purchase a new car. The average cost of her one-way Uber trip is $15. Nerida works five days a week for 50 weeks a year. Based solely on avoiding the cost of an Uber, Nerida should purchase a car if the cost of the car is _____ than _____ per week. - greater; $75 - less; $75 - greater; $150 - less; $150

less; $150

The __________ suggests, decisions about quantities are best made incrementally. - interdependence principle - opportunity cost principle - marginal principle - cost-benefit principle

marginal principle

Decisions should reflect the _____ costs, rather than just the _____ costs. - financial; marginal - opportunity; nonfinancial - nonfinancial; financial - opportunity; financial

opportunity; financial

The opportunity costs of attending college include the: - cost of room and board. - potential income that could be earned working. - effort and hard work. - cost of clothes to wear at school.

potential income that could be earned working.

Diana is a student studying economics and currently working on her class schedule for next semester. She decides to enroll in a course on economic data analysis because she knows that data analysis is a highly sought-after skill from employers in her career field. Weighing what may affect her in the future opportunities demonstrated dependency: -between college courses. -between people or businesses in the same market. -through time. -between markets.

through time.

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

you have limited resources.