Question 1

Dividing the total cost of undertaking n units of an activity by n reveals the:
A)average benefit.
B)marginal cost.
C)units per cost.
D)average cost.

Accepted Answer

Average cost is the total cost of undertaking n units of an activity divided by n.

Question 2

Refer to the accompanying table below. The average benefit of 2 units of activity is: $$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$  
A)$80
B)$60
C)$40
D)$20

Accepted Answer

The average benefit of 2 units of activity is calculated by dividing the total benefit at 2 units by 2. The total benefit at 2 units is $160, so the average benefit is $160 / 2 = $80.

Question 3

Refer to the accompanying table below. The marginal cost of the 3?? unit of this activity is:  
$$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$  
A)$30
B)$25
C)$20
D)$10

Accepted Answer

The marginal cost of the 3rd unit is calculated by subtracting the total cost of producing 2 units from the total cost of producing 3 units. From the table, the total cost for 2 units is $40 and for 3 units is $60. Therefore, the marginal cost for the 3rd unit is $60 - $40 = $20.

Question 4

Refer to the accompanying table below. The marginal benefit of the 5?? unit of activity is: $$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$  
A)$50
B)$44
C)$10
D)$5

Accepted Answer

The marginal benefit of the 5th unit of activity is the increase in total benefit from the 4th unit to the 5th unit, which is $220 - $210 = $10.

Question 5

Refer to the accompanying table below. The average cost of 4 units of this activity is: $$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$  
A)$20
B)$25
C)$30
D)$40

Accepted Answer

The answer of Refer to the accompanying table below. The average...

Question 6

Refer to the accompanying table below. The marginal benefit of the 6ᵗʰ unit of activity is:   
A)$1
B)$2
C)$4
D)$7

Accepted Answer

Total benefit increases from 40 to 42 when you go from 5 to 6 units, so the marginal benefit of the 6ᵗʰ unit is $2.

Question 7

You save $10 on gas every week because you take the bus to school. You have class 5 days a week. What is your average benefit per day of taking the bus to school?
A)$10
B)$5
C)$2
D)$0

Accepted Answer

Your average benefit per day is your total benefit, $10, divided by the number of days you take the bus, 5. So your average benefit per day is $2.

Question 8

Refer to the accompanying table below. The average cost of 5 units of activity is:   
A)$4
B)$6
C)$8
D)$10

Accepted Answer

Average cost is the total cost divided by the number of units. Here $30/5 = $6.

Question 9

The accompanying table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities.    
The total labor cost with 4 employees is:
A)$21,500.
B)$22,000.
C)$38,000.
D)$43,121.

Accepted Answer

With 4 employees, average labor costs are $9,500. Total labor costs equal average labor costs times the number of employees or $38,000 ($9,500 × 4).

Question 10

Refer to the accompanying table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out?   
A)2
B)3
C)4
D)5

Accepted Answer

Three units of this activity provide a net benefit (total benefit - total cost)of $18, which is the highest of all the options given. Also, note that marginal benefit is greater than marginal cost for the first three units, but marginal benefit is less than marginal cost for units 4, 5, 6 and 7.

Question 11

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100ᵗʰ meal is:
A)$6.
B)$4.
C)$0.25.
D)$0.

Accepted Answer

The non-refundable $600 you paid for your meal plan is a sunk cost; no matter how many meals you eat up to 150, your marginal cost is 0.

Question 12

Refer to the accompanying table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out? $$\begin{array} { | c | r r | r | } 
\hline \text { Units of Activity } &  { \text { Tatal Cast } } & { \text { Tatal Benefit } } \
\hline 0 & \$ 0 & \$ 0 \
\hline 1 & \$ 30 & \$ 100 \
\hline 2 & \$ 40 & \$ 160 \
\hline 3 & \$ 60 & \$ 190 \
\hline 4 & \$ 100 & \$ 210 \
\hline 5 & \$150 & \$ 220 \
\hline 6 &\$210& \$ 225 \
\hline
\end{array}$$  
A)1
B)3
C)4
D)6

Accepted Answer

The Cost-Benefit Principle states that an activity should be carried out up to the point where the marginal benefit equals the marginal cost. In this case, the marginal benefit is $30 for the first unit, $60 for the second unit, and $30 for the third unit. The marginal cost is $10 for the first unit, $20 for the second unit, and $40 for the third unit. Therefore, the activity should be carried out up to the third unit, where the marginal benefit equals the marginal cost.

Question 13

The average benefit of n units of an activity is the:
A)total benefit of n units divided by n.
B)n divided by the total benefit of n units.
C)n times the total benefit of n units.
D)extra benefit from carrying out one additional unit of the activity.

Accepted Answer

Any average is the total divided by the number of units.

Question 14

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average cost for a meal is:
A)$6.
B)$5.
C)$4.
D)$0.25.

Accepted Answer

To find the average cost, divide the total cost by the number of meals. Here, $600/150 = $4.

Question 15

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your average cost for a meal is:
A)$6.
B)$5.
C)$4.
D)$0.25.

Accepted Answer

To find the average cost, divide the total cost by the number of meals. Here, $600/100 = $6.

Question 16

Refer to the accompanying table below. The average benefit of 4 units of activity is:   
A)$4
B)$5
C)$9
D)$10

Accepted Answer

Average benefit is total benefit divided by the number of units. Here $36/4 = $9.

Question 17

The accompanying table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities.   
The total value of donations raised by three employees is: 
A)$43,899.
B)$45,000.
C)$48,911.
D)$51,963.

Accepted Answer

With three employees, average donations are $17,321. Total donations equal average donations times the number of employees, or $51,963 (= $17,321 × 3).

Question 18

Refer to the accompanying table below. The marginal cost of the 4ᵗʰ unit of activity is:   
A)$5
B)$6
C)$8
D)$10

Accepted Answer

Total cost increases from $12 to $20 when you go from 3 to 4 units, so the marginal cost of the 4ᵗʰ unit is $8.

Question 19

The extra cost that results from carrying out one additional unit of an activity is the ________ of the activity.
A)marginal benefit
B)marginal cost
C)reservation cost
D)opportunity cost

Accepted Answer

Marginal cost is the additional cost of carrying out one additional unit of an activity.

Question 20

Your scholarship depends on your maintaining a 3.5 cumulative GPA. Your GPA for last semester was 3.6, which brought your cumulative GPA down. What must be true?
A)Last semester's grades were higher than your overall GPA.
B)Last semester's grades were lower than your overall GPA.
C)If this semester's grades are the same as last semester's, your overall GPA will stay the same.
D)If this semester's grades are the same as last semester's, you might lose your scholarship.

Accepted Answer

When an average is falling, it must be true that the last unit included is less than the average over all prior units.

Quiz 1: Thinking Like an Economist

Dividing the total cost of undertaking n units of an activity by n reveals the:

Refer to the accompanying table below. The marginal benefit of the 6ᵗʰ unit of activity is:

You save $10 on gas every week because you take the bus to school. You have class 5 days a week. What is your average benefit per day of taking the bus to school?

Refer to the accompanying table below. The average cost of 5 units of activity is:

The accompanying table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The total labor cost with 4 employees is:

Refer to the accompanying table below. According to the Cost-Benefit Principle, how many units of this activity should be carried out?

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your marginal cost of the 100ᵗʰ meal is:

The average benefit of n units of an activity is the:

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat all of the meals, your average cost for a meal is:

For the fall semester, you had to pay a nonrefundable fee of $600 for your meal plan, which gives you up to 150 meals. If you eat 100 meals, your average cost for a meal is:

Refer to the accompanying table below. The average benefit of 4 units of activity is:

The accompanying table below shows how total donations, average donations, total labor costs and average labor costs vary depending on the number of employees State U hires for its fundraising activities. The total value of donations raised by three employees is:

Refer to the accompanying table below. The marginal cost of the 4ᵗʰ unit of activity is:

The extra cost that results from carrying out one additional unit of an activity is the ________ of the activity.

Your scholarship depends on your maintaining a 3.5 cumulative GPA. Your GPA for last semester was 3.6, which brought your cumulative GPA down. What must be true?