Question 1

You have paid $100 for student season tickets to the football games at your university. It is 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)$100 you spent on the season tickets.
B)time spent to go to the game instead of studying.
C)satisfaction you will get if your team wins a game.
D)$5 you can make per game by selling your remaining tickets.

Accepted Answer

The $100 spent on the season tickets is a sunk cost, meaning it has already been incurred and cannot be recovered, so it should not affect the decision to attend future games.

Question 2

The __________ suggests, decisions about quantities are best made incrementally.
A)cost-benefit principle
B)opportunity cost principle
C)marginal principle
D)interdependence principle

Accepted Answer

The marginal principle suggests that decisions about quantities should be made incrementally, meaning considering the costs and benefits of each additional unit before deciding to produce or consume it. This principle helps in making efficient decisions and avoiding excess or shortage of production.

Question 3

The marginal principle says that decisions about quantities are best made
A)incrementally.
B)arbitrarily.
C)all at once.
D)in total.

Accepted Answer

The marginal principle suggests that decisions about quantities should be made incrementally, which means adding or subtracting small amounts as needed. This helps to ensure that the decision-maker is continuously evaluating the marginal benefit and cost of each unit added or subtracted, leading to a more optimal outcome.

Question 4

The marginal benefit from an additional worker is
A)the additional benefit from hiring one more worker.
B)the total benefit from all workers hired.
C)always equal to the benefit from the first worker hired.
D)always equal to the cost of hiring the additional worker.

Accepted Answer

The marginal benefit is the additional benefit from hiring one more worker. It is not the total benefit from all workers hired, nor is it always equal to the benefit from the first worker hired. It is also not always equal to the cost of hiring the additional worker. Therefore, the best answer is A.

Question 5

The marginal cost of an additional worker is
A)always equal to the cost from the first worker hired.
B)always equal to the benefit of hiring the additional worker.
C)the total cost of all workers hired.
D)the additional cost of hiring one more worker.

Accepted Answer

Marginal cost refers to the additional cost incurred when one more unit of a good or service is produced. In this case, the additional worker represents the one more unit being produced, and the marginal cost is the additional cost of hiring them. Therefore, the correct answer is D.

Question 6

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:
A)benefit of purchasing one more coffee equals the marginal cost.
B)benefit of purchasing one more coffee is less than the marginal cost.
C)benefit of purchasing one more coffee is positive.
D)cost of purchasing one more coffee is positive.

Accepted Answer

Joshua should keep buying coffee until the marginal benefit of purchasing one more coffee equals the marginal cost. This is because it means he is getting the maximum amount of benefit from each cup of coffee without overspending. Once the marginal benefit of purchasing one more coffee is less than the marginal cost, he would be spending more than he is benefiting, and it would not be an efficient use of his resources.

Question 7

Joshua Murphy is planning on studying late into the night for his economics exam. He is contemplating how many coffees to buy tonight. Joshua should not buy an additional coffee during the evening if the marginal
A)benefit of purchasing one more coffee exceeds the marginal cost.
B)benefit of purchasing one more coffee is less than the marginal cost.
C)benefit of purchasing one more coffee is positive.
D)cost of purchasing one more coffee is positive.

Accepted Answer

Joshua should not buy an additional coffee during the evening if the marginal benefit of purchasing one more coffee is less than the marginal cost. This means that Joshua should only buy a coffee if the additional benefit he receives from the coffee is greater than the additional cost of buying the coffee. If the marginal benefit is less than the marginal cost, then buying another coffee would not be worth it.

Question 8

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:
A)benefit of watching another episode exceeds the marginal cost.
B)benefit of watching another episode is less than the marginal cost.
C)benefit of watching another episode is positive.
D)cost of watching another episode is positive.

Accepted Answer

Kathleen should continue watching episodes as long as the marginal benefit of watching another episode exceeds the marginal cost. If the benefit is less than the cost, she should stop watching. If the benefit is positive, but less than the cost, she may want to consider stopping or finding another activity with a higher net benefit. Therefore, option A is the best choice.

Question 9

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is trying to decide how many more episodes to watch. Kathleen should continue watching episodes unless the marginal
A)benefit of watching another episode exceeds the marginal cost.
B)benefit of watching another episode is equal to the marginal cost.
C)benefit of watching another episode is positive.
D)cost of watching another episode is positive.

Accepted Answer

Kathleen should continue watching episodes until the marginal benefit of watching another episode is equal to the marginal cost. This is the point where the satisfaction gained from watching one more episode is exactly balanced by the cost (time, opportunity cost, etc.) of doing so, optimizing her utility.

Question 10

The study of economics arises because of the necessity of choice, and the necessity of choice arises because of the fundamental problem of:
A)inefficiency.
B)equilibrium.
C)inequity.
D)scarcity.

Accepted Answer

The study of economics arises due to the fundamental problem of scarcity, which is the condition that arises because society has limited resources and unlimited wants and needs. Therefore, individuals and society as a whole must make choices about how to allocate scarce resources to satisfy their wants and needs. This necessity of choice is what gives rise to economic thinking and the study of economics.

Question 11

When evaluating how much to produce, increase the quantity produced if the marginal benefit of an additional item is _____ the marginal cost of the additional item.
A)greater than or equal to
B)equal to
C)less than or equal to
D)less than

Accepted Answer

When the marginal benefit of producing an additional item is greater than or equal to the marginal cost, it means that the additional unit produced generates enough revenue to cover the costs of producing it and even provides extra profit. Therefore, it makes sense to increase the quantity produced until the marginal benefit becomes equal to the marginal cost.

Question 12

The marginal principle breaks quantity decisions into iterative decisions that use the
A)cost-benefit principle.
B)opportunity cost principle.
C)interdependence principle.
D)sunk cost evaluation.

Accepted Answer

The marginal principle involves making decisions based on the additional benefit versus the additional cost of that decision, aligning with the cost-benefit principle. It does not directly relate to opportunity cost, interdependence, or sunk costs in its definition.

Question 13

The rational rule summarizes the marginal principle. It says that if something is worth doing, keep doing it until your marginal
A)benefits equal your marginal costs.
B)benefits exceed your marginal costs.
C)benefits are zero.
D)costs are less than your marginal benefits.

Accepted Answer

The rational rule states that you should keep doing something as long as the marginal benefit (the additional benefit you receive from doing one more unit of that activity) is greater than or equal to the marginal cost (the additional cost you incur from doing one more unit of that activity). Therefore, the correct choice is A since you need to keep doing it until your marginal benefits equal your marginal costs.

Question 14

The rational rule suggests you should continue with an activity until your _____ benefit _____ your marginal cost.
A)total; equals
B)total; exceeds
C)marginal; equals
D)marginal; is less than

Accepted Answer

The rational rule for continuing an activity is to do so until the marginal benefit equals the marginal cost. This principle is fundamental in economics, indicating the point at which the additional benefit of consuming or producing one more unit of something is exactly equal to the cost of consuming or producing that unit.

Question 15

Ron is buying jeans online and has to decide how many to buy. He should buy an additional pair if the
A)marginal benefit of the next pair is less than the price of the jeans.
B)marginal benefit of the next pair is at least as high as the price of the jeans.
C)total benefit when purchasing one more pair is less than the total cost of the jeans.
D)total benefit when purchasing one more pair is at least as high as the total cost of the jeans.

Accepted Answer

Ron should buy an additional pair if the marginal benefit of the next pair is at least as high as the price of the jeans. This means that the additional benefit he receives from buying one more pair is worth at least the cost of the pair itself. This ensures that Ron is getting the most value out of his purchase without overspending.

Question 16

Taryn is buying shirts online and has to decide how many shirts to buy. She should buy another shirt if the
A)marginal benefit of the next shirt is less than the price of the shirt.
B)marginal benefit of the next shirt is at least as high as the price of the shirt.
C)total benefit when purchasing one more shirt is less than the total cost of the shirts.
D)total benefit when purchasing one more shirt is at least as high as the total cost of the shirts.

Accepted Answer

Taryn should only buy another shirt if the marginal benefit (the additional satisfaction or utility gained from having one more shirt) is at least as high as the price of the shirt. If the marginal benefit is lower than the price, then she is essentially paying more for the shirt than it is worth to her.

Question 17

Following the rational rule, the economic surplus is maximized when
A)total benefits equal total costs.
B)total benefits exceed total costs.
C)marginal benefits equal marginal costs.
D)marginal benefits exceed marginal costs.

Accepted Answer

The rational rule for maximizing economic surplus is to reach the point where marginal benefits equal marginal costs. At this point, any further increase in production would result in a decrease in economic surplus because the additional production cost would be greater than the additional benefit gained. Therefore, choice C is the best answer.

Question 18

To maximize economic surplus, keep increasing output as long as
A)total benefits equal total costs.
B)total benefits exceed total costs.
C)marginal benefits equal marginal costs.
D)marginal benefits exceed marginal costs.

Accepted Answer

To maximize economic surplus, marginal benefits should exceed marginal costs. This means that producing one more unit of output would generate more additional benefit than the additional cost incurred, resulting in a net gain in surplus. If marginal benefits are equal to marginal costs, then the current level of output is already maximizing economic surplus, and any further increase or decrease in output would decrease surplus.

Question 19

When faced with a quantity decision, the economic surplus stops increasing when
A)total benefits equal to total costs.
B)total benefits exceed total costs.
C)marginal benefits equal marginal costs.
D)marginal benefits exceed marginal costs.

Accepted Answer

Economic surplus is maximized when marginal benefits equal marginal costs, meaning that any further increase in quantity will lead to the marginal cost being greater than the marginal benefit. At this point, the economic surplus stops increasing and may even decrease if quantity continues to increase.

Question 20

When faced with a quantity decision, the economic surplus is always maximized by following the
A)Rational Rule.
B)framing effect.
C)opportunity cost principle.
D)interdependence principle.

Accepted Answer

The Rational Rule states that economic agents (consumers, producers, etc.) should continue to engage in an activity as long as the additional benefit from doing so exceeds the additional cost. This means that in a quantity decision, economic surplus (the difference between the total benefit and total cost) can be maximized by choosing the quantity that equates marginal benefit and marginal cost. This is known as the optimal quantity, and it is determined by comparing the additional benefit of producing or consuming an additional unit of a good or service with the additional cost of doing so. Therefore, the Rational Rule is the best option for maximizing economic surplus in a quantity decision.

Quiz 1: The Core Principles of Economics

The __________ suggests, decisions about quantities are best made incrementally.

The marginal principle says that decisions about quantities are best made

The marginal benefit from an additional worker is

The marginal cost of an additional worker is

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:

Joshua Murphy is planning on studying late into the night for his economics exam. He is contemplating how many coffees to buy tonight. Joshua should not buy an additional coffee during the evening if the marginal

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:

Kathleen Alvarado is binge-watching her favorite show on Netflix. She is trying to decide how many more episodes to watch. Kathleen should continue watching episodes unless the marginal

The study of economics arises because of the necessity of choice, and the necessity of choice arises because of the fundamental problem of:

When evaluating how much to produce, increase the quantity produced if the marginal benefit of an additional item is _____ the marginal cost of the additional item.

The marginal principle breaks quantity decisions into iterative decisions that use the

The rational rule summarizes the marginal principle. It says that if something is worth doing, keep doing it until your marginal

The rational rule suggests you should continue with an activity until your _ benefit _ your marginal cost.

Ron is buying jeans online and has to decide how many to buy. He should buy an additional pair if the

Taryn is buying shirts online and has to decide how many shirts to buy. She should buy another shirt if the

Following the rational rule, the economic surplus is maximized when

To maximize economic surplus, keep increasing output as long as

When faced with a quantity decision, the economic surplus stops increasing when

When faced with a quantity decision, the economic surplus is always maximized by following the