Mirco Prep Quiz 1

To determine your next best alternative

When applying the opportunity cost principle, why is it important to ask, "or what?"

When the out-of-pocket costs do not exist in the next best alternative.

When are out-of-pocket costs also opportunity costs?

interdependence

According to the _____ principle, your best choice depends on your other choices, the choices others make, developments in other markets, and expectations about the future.

your marginal benefit equals your marginal cost.

According to the rational rule, if something is worth doing, you should keep doing it until:

costs and benefits costs and benefits

Changes in other markets can influence _____, and thereby change a person's best choice in another market. Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

Dependencies between your own choices

Every choice you make affects the resources available for every other one of your decisions. This is a fact that best describes which of these interdependencies?

exceeds; increases

Hiring another worker is beneficial when the marginal benefit of hiring one more worker _____ the marginal cost, meaning that hiring another worker _____ economic surplus. Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

There will only be either/or choices left.

How do you know when you have broken a decision into its smallest components?

total benefits more than total costs.

If a decision boosts a person's economic surplus, then it must be true that the decision boosted:

5,000

If a manager offers a potential employee $45,000, but the employee would be willing to work for $40,000, and the manager will make $65,000 from the work that the employee does, what is the employee's economic surplus?

interdependence

If a person ignores the _____ principle, she might be tempted to consider each market in isolation.

economic surplus.

If buyers and sellers always follow the cost-benefit principle, it ensures that all transactions will yield:

willingness to pay

In order to convert nonfinancial costs or benefits into their monetary equivalent, assess your:

or

In order to ensure that you are applying the opportunity cost principle correctly, when you pose a question, which word or phrase should always appear in the middle of the sentence?

His opportunity cost is lower than that of healthy people.

Matthew has been diagnosed with cancer and doctors estimate that he has roughly 5 months to live. From an economic standpoint, which best explains why Matthew might be more likely than a healthy person to take a risky experimental drug?

The marginal principle

Nasser owns a business that produces t-shirts, but he is struggling with the dilemma of how many shirts to produce, so he begins by asking himself if he should produce one more shirt. Which economic principle is exemplified by this situation?

opportunity cost

The _____ principle states that people should assess the consequences of their choice relative to the best of the alternatives.

economic surplus 1

When a person makes a decision following the cost-benefit principle, they generate:

the underlying costs and benefits; how the choice is described

The cost-benefit principle says that people should make choices based on _____ of the choice they face, rather than _____. Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

opportunity costs

The production possibility frontier illustrates the tradeoffs, or _____, people confront when deciding how to best allocate their resources.

It expands outward.

What happens to the production possibility frontier when a technique is discovered that allows more outputs to be produced with the same amount of inputs?

opportunity cost

When you pursue a choice of using a scarce resource, there is a(n):

They find it difficult to ignore sunk costs.

Which best explains why entrepreneurs often have a difficult time shutting down their business even if the economic profit from their business is negative?

What else?

Which of these best describes the big idea behind the interdependence principle?

The cost-benefit principle

Which of these principles, when followed correctly, causes people to avoid making choices that reduce their economic surplus?

The rational rule

Which of these would allow a business owner to experiment with hiring more workers until profits are maximized? Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

Marginal cost and marginal benefit

Which two values should a business owner compare before deciding to hire one more worker? Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

The opportunity cost principle

You are considering starting a sandwich shop, but are comparing that to the idea of staying at your current job instead. Which economic principle are you taking into account?

framing effect.

You are the CEO of a car manufacturing company, and realize that you may have to lay off 10,000 employees unless you take some other form of action. Your Chief Financial Officer comes up with two solutions: the first saves 6,000 jobs, and the second causes the company to lose 4,000 jobs. The first option sounds ideal at first; however, both options give the same outcome of cutting 4,000 jobs and saving 6,000 jobs. This example represents the concept of:

the next best alternative.

When properly applying the cost-benefit principle, you must calculate the costs and benefits of a decision relative to: Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

interdependence

When someone seeks to be aware of how a decision is affected by other decisions, they are taking into account the _____ principle.

cost-benefit

When someone weighs the pros and cons of a particular decision, they are taking into account the _____ principle.

Scarcity

Why does every choice you make affect your other decisions?

The interdependence principle

You are trying to decide if you should buy a warmer coat, but realize that the answer to this question will depend on whether you are taking a trip to Canada next month. Which economic principle is taken into account? Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices

When the sale price is below or as much as your willingness to pay.

Your friend asks you to check out his favorite store because there is a big sales event going on. As an economic student, when should you buy the product? Please choose the correct answer from the following choices, and then select the submit answer button. Answer choices