 |
| 1.
| |
The economic surplus arising from doing something is |
| | A) | the benefit from doing it. |
| | B) | the cost of doing it. |
| | C) | the difference between the benefit and the cost. |
| | D) | the average of the benefits and cost. |
| | E) | the ratio of the benefits to the costs. |
|
|
|
| 2.
| |
Economic models dealing with choices claim to be a(n) |
| | A) | reasonable and simplifying abstraction of how people choose, emphasising the most important factors they take into account |
| | B) | exact and exhaustive account of how choices are made |
| | C) | interesting theoretical exercise with little applicability to the real world |
| | D) | exceptionally accurate method of predicting nearly all behaviour |
| | E) | absolutely correct description of the world.
answer |
|
|
|
| 3.
| |
If, measured in Euros,the total benefits of watching 1,2, and 3 football games on TV are €10, €12, and €13 then the marginal benefits are |
| | A) | €10,€12, and €13. |
| | B) | €10, €2, and €1. |
| | C) | €10, €22,and €39 |
| | D) | €3, €2, and €1 |
| | E) | €10, €24,and €36. |
|
|
|
| 4.
| |
Consider the following. Last week you took a bus down town to buy a concert ticket, price €20, at a 20% cash discount rather than buy it over the Internet. Nothing in your life has changed since last week, and you are now considering buying an airline ticket to the US for the summer. Over the Internet the price is €250, but a travel agent in the town will give 2% cash discount |
| | A) | It would not be rational to travel down town because the €5 saving is only 2% of the cost of the ticket and that is much less than the 20% you saved on the concert ticket. |
| | B) | It would be rational travel down town because it costs less to buy the ticket there than via the Internet. |
| | C) | It would be rational travel to town because the €5 saving is more than you saved by going there to buy the concert ticket. |
| | D) | It would not be rational totravel to town to purchase the ticket because the cost of the bus fare and your time must be more than the €5 you would save |
| | E) | There is insufficient information to determine whether it would be rational or not to buy the ticket in town |
|
|
|
| 5.
| |
Tony notes that an electronics store is offering a flat €20 off all prices in the store. Tony reasons that if he wants to buy something with a price of €50 that it is a good offer but if he wants to buy something with a price of €500 it is not a good offer. This is an example of: |
| | A) | inconsistent reasoning; saving €20 is saving €20. |
| | B) | the proper application of the cost-benefit principle. |
| | C) | rational choice because in the first case he saves 40% and in the second case he saves 4%. |
| | D) | marginal cost equals marginal benefit thinking. |
| | E) | opportunity costs |
|
|
|
| 6.
| |
Heidi has estimated that the additional benefit of writing 100 more lines of computer programming code is €10 and the additional cost is €6. She should: |
| | A) | not write the code because it would not be a rational choice. |
| | B) | write the code because it would be a rational choice and an
optimal quantity |
| | C) | write the code because it would be a rational choice but it is not an optimal quantity. |
| | D) | not write the code because it would not be a rational choice but it would be an optimal quantity. |
| | E) | not write the code because it would not be a rational choice, nor would it be an optimal quantity |
|
|
|
| 7.
| |
Sonya is employed by the hour at an investment fund firm where she earns €25 per hour. The office she works at is located in the city centre. To get to work each day, she must either take a series of buses that takes one-and-a-half hours at a cost of €2, or take a cab that takes 30 minutes and costs €20. Assuming she goes to work, the opportunity cost: |
| | A) | of taking the bus is €2, and taking the cab is €20. |
| | B) | of taking the bus is €37.50, and taking the cab is €12.50. |
| | C) | of taking the bus is €35.50, and taking the cab is -€5. |
| | D) | of taking the bus is €39.50, and taking the cab is €32.50. |
| | E) | of taking the bus is €27, and taking the cab is €20. |
|
|
|
| 8.
| |
Jacques decides to see a movie that costs €7 for the ticket and has an opportunity cost of €20. After the movie, he says to one of his friends that the movie was not worth it. Apparently, |
| | A) | he failed to apply the cost-benefit model to his decision. |
| | B) | he was not rational. |
| | C) | the economic model of cost-benefit analysis failed. |
| | D) | he overestimated the benefits of the movie. |
| | E) | this proves the limitations of economic models, specifically the
cost-benefit principle. |
|
|
|
| 9.
| |
For most students, the opportunity cost of taking an 8.00 am Monday, Wednesday, and Friday class is the value of one hour's worth of: |
| | A) | studying. |
| | B) | dental work. |
| | C) | cleaning. |
| | D) | washing. |
| | E) | sleeping. |
|
|
|
| 10.
| |
Denis purchased his nonrefundable, nontransferable ticket to see the M.C. Hammer/Vanilla Ice Career Revival show for €30 last week, while Barbara has yet to buy her ticket but wants to go. In deciding whether to go to the show, the price of the ticket is a ________ to Dillon and a _________ to Barbara. |
| | A) | sunk cost; sunk cost |
| | B) | relevant cost; sunk cost |
| | C) | sunk cost; variable cost |
| | D) | fixed cost; variable cost |
| | E) | relevant cost; irrelevant cost |
|
|
.