Question 1

(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. At 4 hours of study the student will "maximize" because:

Accepted Answer

At 4 hours of study, the marginal benefit (MB) of studying economics equals the marginal cost (MC) of not studying accounting, both are 20, and this is the point where the difference between total benefits and total costs is maximized, making all of the statements correct.

Question 2

-(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. When the student studies economics for 4 hours, the marginal benefit is _______ ;when the student studies for 6 hours, the marginal benefit is _______ .

Accepted Answer

The marginal benefit is the additional benefit received from an additional unit of an activity. At 4 hours, the marginal benefit is 20 points, indicating the increase in economics score from studying for that additional hour. At 6 hours, the marginal benefit decreases to 10, reflecting the diminishing returns of studying more hours.

Question 3

The _______ is the amount by which an additional unit of activity increases its cost.

Accepted Answer

The definition provided matches with the concept of marginal cost. Marginal cost is the increase in cost that occurs when a firm produces one more unit of output.

Question 4

The _______ is the amount by which an additional unit of an activity increases its total benefit.

Accepted Answer

Marginal benefit is the increase in total benefit that results from carrying out one extra unit of an activity. It is the benefit derived from the last unit of activity carried out.

Question 5

(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. The student in this example would maximize net benefits by studying economics for _______ hours.

Accepted Answer

The student should continue studying economics as long as the marginal benefit is greater than or equal to the marginal cost. Looking at the graph, the marginal benefit of studying economics is higher than the marginal cost until 4 hours of studying economics. At this point, the marginal benefit and marginal cost intersect, indicating that studying economics beyond 4 hours will result in a net loss. Therefore, the student should study economics for 4 hours to maximize net benefits.

Question 6

The costs economists use in the concept of economic profit are:

Accepted Answer

The answer of The costs economists use in the concept...

Question 7

Maximizing choices must be made within parameters imposed by:

Accepted Answer

Maximizing choices must be made within parameters imposed by constraints, boundaries, and limits. Therefore, all of the above options are true.

Question 8

Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively. With 3 total hours of study time, your combined scores can be maximized by spending _______ hours studying accounting.

Accepted Answer

The answer of Suppose that the expected exam scores from...

Question 9

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $5 to spend and decide to purchase 6 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

Accepted Answer

If 6 boxes of popcorn cost $3, then you have $2 left to spend on peanuts.

Since peanuts cost $0.25 per bag, you can purchase:

$2 / $0.25 per bag = 8 bags of peanuts.

Therefore, the best choice is to purchase 6 boxes of popcorn and 8 bags of peanuts.

Question 10

Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are 65, 80, 90, and 95 points, respectively, while the expected exam scores for studying 0, 1, 2, or 3 hours of accounting are 50, 65, 70, and 70 points, respectively. With 3 total hours of study time, your combined scores can be maximized by spending _______ hours studying economics.

Accepted Answer

To maximize the combined scores with 3 total hours of study time, we need to find the combination of study hours that gives us the highest sum of expected scores. We can create a table to compare the expected scores for all possible combinations of study hours:

| Economics / Accounting | 0 hours | 1 hour | 2 hours | 3 hours |
| ----------------------|--------|--------|--------|--------|
| 0 hours                | 115    | 115    | 120    | 125    |
| 1 hour                 | 130    | 145    | 155    | 160    |
| 2 hours                | 140    | 155    | 165    | 170    |
| 3 hours                | 135    | 150    | 160    | 165    |

From the table, we can see that the highest combined score of 170 points can be achieved by spending 2 hours studying economics and 1 hour studying accounting. Therefore, the best choice is to spend 2 hours studying economics.

Question 11

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $10 to spend and decide to purchase 20 bags of peanuts, the maximum quantity of popcorn that you can purchase is _______ boxes.

Accepted Answer

With $10, you have spent $10 - (20 × $0.25) = $5 on peanuts. You can purchase a maximum of 10 boxes of popcorn with the remaining $5 at $0.50 per box ($5 ÷ $0.50 = 10). Therefore, the best choice is option B, which allows you to purchase the maximum quantity possible.

Question 12

Maximization of the net benefit of an activity occurs when:

Accepted Answer

Maximization of net benefit occurs when the marginal benefit (MB) of an activity equals marginal cost (MC). This is because at this point, the activity is providing the most benefit possible while not being too costly. If MB is greater than MC, then it would be beneficial to increase the activity because the benefits outweigh the costs. However, if MB is less than MC, then the activity is not providing enough benefit to justify the cost, and it should either be reduced or stopped altogether. Therefore, only option A satisfies the condition for maximizing net benefit.

Question 13

The marginal benefit of studying economics when the student is at 4 hours is _______ points and the marginal cost is ________ points.

Accepted Answer

At 4 hours, the marginal benefit of studying economics is equal to the marginal cost, which means that continuing to study for longer would result in diminishing returns. Therefore, the best choice would be to stop studying at 4 hours.

Question 14

In economics the assumption is made that consumers and firms will make choices that maximize(s) the _______ of each activity.

Accepted Answer

The assumption that consumers and firms will make choices that maximize their net benefit is the foundation of rational choice theory in economics. Net benefit is defined as the difference between the total benefit and the total cost of an activity. Therefore, maximizing net benefit involves weighing the expected benefits against the expected costs of each activity and choosing the option that yields the greatest difference.

Question 15

Activities of consumers and firms:

Accepted Answer

Both consumers and firms engage in activities that involve both costs and benefits. For consumers, the benefits may include satisfaction or pleasure from consuming goods and services, while the costs may include the money spent on those goods and services. For firms, the benefits may include profits from selling goods and services, while the costs may include expenses such as wages, rent, and materials. Economic theory seeks to analyze and understand these costs and benefits and how they affect the behavior of consumers and firms.

Question 16

-(Exhibit: Marginal Benefits and Marginal Costs) In the exhibit, more time spent studying economics adds points to economics scores but subtracts points from accounting scores. The marginal benefit of studying economics when the student is at 2 hours is _______ points and the marginal cost is _______ points.

Accepted Answer

The marginal benefit of studying economics for an additional hour when the student is at 2 hours is the increase in economics score due to that extra hour of study, which is 30 points. The marginal cost, in this context, is the loss in accounting score due to that extra hour spent on economics, which is 10 points.

Question 17

Net benefit is maximized when marginal benefit _______ marginal cost.

Accepted Answer

Net benefit is maximized when marginal benefit equals marginal cost. This is because when the marginal benefit is greater than the marginal cost, there is still room to increase production and gain more benefit until the two are equal. When the marginal cost exceeds the marginal benefit, it means the production is no longer worth it, leading to decreased net benefit. Therefore, maximizing net benefit requires the equation MB=MC to be satisfied.

Question 18

To determine the quantity of any activity that will maximize net benefit, economists employ the ________ rule.

Accepted Answer

The marginal decision rule states that the optimal quantity of an activity is where the marginal benefit (additional benefit from one more unit) equals the marginal cost (additional cost of one more unit), leading to the maximum net benefit.

Question 19

If the price of popcorn is $0.50 per box and the price of peanuts is $0.25 per bag, and you have $5 to spend and decide to purchase 8 boxes of popcorn, the maximum quantity of peanuts that you can purchase is _______ bags.

Accepted Answer

The cost of 8 boxes of popcorn is 8 * $0.50 = $4. You have $5, so after buying the popcorn, you have $5 - $4 = $1 left. Since each bag of peanuts costs $0.25, with $1 you can buy 1 / 0.25 = 4 bags of peanuts.

Question 20

In order to maximize net benefit, consumers and firms evaluate each activity at the:

Accepted Answer

Evaluating activities at the margin means considering the additional benefits and costs of small incremental changes. This helps consumers and firms make efficient choices that maximize their net benefit.

Quiz 6: Consumer Choices