Test bank for principles of microeconomics 3rd australian edition by frank

Page of 25 This chapter has 105 questions Scroll down to see and select individual questions or narrow the list using the checkboxes below Multiple Choice Questions - (105) questions at random and keep in order  EQUIS: Communicate - (11) Odd Numbered - (53) EQUIS: Communication - (28) Even Numbered - (52) Graduate attribute: Communication - (39) AACSB: Analyse - (1) Graduate attribute: Problem - (1) AACSB: Analytic - (65) Graduate attribute: Problem solving - (65) AACSB: Communicate - (28) Learning Objective: 01-02 Distinguish between microeconomics and macroeconomics, and between positive and normative economics - (3) AACSB: Communication - (11) Difficulty: Easy - (35) Difficulty: Hard - (21) Learning Objective: 01-03 State the scarcity principle and explain its implications for decision making - (9) Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions - (33) Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a range of real-world examples - (60) Difficulty: Medium - (49) Time taken: mins - (36) EQUIS: Analyse - (65) Time taken: mins - (69) EQUIS: Analytic - (1) Economics is best defined as the study of: prices and quantities inflation and interest rates → how people make choices under conditions of scarcity and the results of those choices wages and incomes AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-03 State the scarcity principle and explain its Question Economics is best defined as the implications for decision making study of: Time taken: mins For a given question to be considered an economic question, it would need to involve: explicit prices making a choice limited resources → limited resources and making a choice AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-03 State the scarcity principle and explain its Question For a given question to be considered implications for decision making an eco Time taken: mins With limited resources, the best choice of a course of action takes into account: only the benefits of making that choice the least possible cost of making that choice → both the benefits and the cost of making that choice what gives the greatest pleasure AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions Time taken: mins Multiple Choice Question Question With limited resources, the best choice of a The scarcity principle indicates that: no matter how much one has, it is never enough compared with 100 years ago, individuals have less time today → with limited resources, having more of ‘this' means having less of ‘that' the wealthier one is, the fewer the number of trade-offs one must make AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to simple Question The scarcity principle indicates economic decisions that: Time taken: mins The logical implication of the scarcity principle is that: one will never be satisfied with what one has as wealth increases, making trade-offs becomes less necessary as wealth decreases, making trade-offs becomes less necessary Full file at https://TestbankDirect.eu/ Page of 25 → choices must be made AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Learning Objective: 01-03 State the scarcity principle and explain its implications for decision making Time taken: mins Multiple Choice Question Question The logical implication of the scarcity prin The principle of scarcity applies to: the poor exclusively all consumers all firms → everyone: consumers, firms, governments and nations AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Learning Objective: 01-03 State the scarcity principle and explain its implications for decision making Time taken: mins Multiple Choice Question Question The principle of scarcity applies to: The scarcity principle applies to: → all decisions only market decisions; e.g buying a car only non-market decisions; e.g watching a sunset only the poor AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-03 State the scarcity principle and explain its implications for Question The scarcity principle applies decision making to: Time taken: mins Dr Smith makes around $200 000 per year and lives in town, close to his medical practice Allen works as dishwasher in a restaurant next to Dr Smith's office, where he makes $13 per hour Allen has to drive two hours every day to get to work, but lives in a much nicer neighbourhood than Dr Smith, who earns much more than Allen The most likely explanation for this is that: the opportunity cost of Dr Smith's time is lower than that of Allen's time the scarcity principle applies to Dr Smith, but does not apply to Allen → the opportunity cost of Dr Smith's time is higher than that of Allen's time Allen loves to drive but Dr Smith doesn't AACSB: Analytic Difficulty: Easy EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question Dr Smith makes around $200 000 per simple economic decisions year and Time taken: mins Josh wants to go to the football game this weekend, but he has an essay due on Monday It will take him the whole weekend to write the essay Josh decides to stay at home and work on the essay According to the scarcity principle, the reason Josh doesn't go to the game is that: the marginal benefit of writing the essay exceeds the marginal benefit of going to the football game writing the essay is easier than going to the game → Josh doesn't have enough time for writing the essay and going to the game it's too expensive to go to the game AACSB: Analytic Difficulty: Easy EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question Josh wants to go to the football game simple economic decisions this w Time taken: mins 10 Whether studying the size of the Australian economy or the number of children a couple will choose to have, the unifying concept is that wants are: limited, resources are limited, and thus trade-offs must be made → unlimited, resources are limited, and thus trade-offs must be made unlimited, resources are limited for some but not for others, and thus some people must make trade-offs unlimited, resources are unlimited, and thus nirvana has been reached Full file at https://TestbankDirect.eu/ Page of 25 Multiple Choice Question Question 10 Whether studying the size of the Australian AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Learning Objective: 01-03 State the scarcity principle and explain its implications for decision making Time taken: mins 11 The cost-benefit principle indicates that an action should be taken: if the total benefits exceed the total costs if the average benefits exceed the average costs if the net benefit (benefit minus cost) is zero → if the extra benefit is greater than or equal to the extra costs AACSB: Analytic Difficulty: Easy EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 11 The cost-benefit principle indicates simple economic decisions that an Time taken: mins 12 Emma kept on arranging flowers for her shop ‘Flora World' until the extra costs of her time spent on arranging a bunch was equal to the extra benefit she gets from selling a bunch This can be described by the: scarcity principle no-free-lunch principle marginal principle → cost-benefit principle AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 12 Emma kept on arranging flowers for simple economic decisions her shop Time taken: mins 13 Choosing to study at university so that the extra benefit (increased possibility of getting a job) equals the extra cost (forgone income while at university) is: → an application of the cost-benefit principle an application of the scarcity principle the relevant opportunity cost less desirable than studying at an overseas university AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 13 Choosing to study at university so simple economic decisions that the Time taken: mins 14 The scarcity principle indicates that and the cost-benefit principle indicates → choices must be made; how to make the choices choices must be made; how to calculate the costs of those choices rare goods are expensive; the costs should outweigh the benefits of the choices rare goods are expensive; the costs should not affect the choice made AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions Time taken: mins Multiple Choice Question Question 14 The scarcity principle indicates that 15 The cost-benefit principle: implies that the cost of all alternatives should not be included when choosing among alternatives implies that the cost of all alternatives should be included when choosing among alternatives → states that an action should be taken only if the extra benefit is at least as great as the extra cost states that an action should be taken only if the extra benefit is less than the extra cost Multiple Choice Question Question 15 The cost-benefit principle: AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions Time taken: mins Full file at https://TestbankDirect.eu/ Page of 25 16 Wang Dinh delivers local newspapers eight hours a week For every hour of newspaper delivery he receives $10 dollars Recently he was offered a job delivering pizzas, which would pay $4 per pizza Given school homework, he has only eight hours a week Using the cost-benefit principle, how many pizzas should he deliver per hour to get same benefit as the newspaper delivery task? Wang Dinh shouldn't deliver pizzas at all because of health concerns → Wang Dinh should deliver at least 2.5 pizzas per hour Wang Dinh should deliver at least 10 pizzas per hour Wang Dinh should deliver at least 20 pizzas per hour AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 16 Wang Dinh delivers local newspapers simple economic decisions eight ho Time taken: mins 17 Janie must either mow the lawn or wash clothes, earning her a benefit of $30 or $45, respectively She dislikes both equally and they both take the same amount of time Janie will therefore choose to because the economic surplus is mow; greater → wash; greater mow; smaller wash; smaller AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 17 Janie must either mow the lawn or simple economic decisions wash cloth Time taken: mins 18 Jason can copy 10 pages per minute at the office where he works or take it to the printing shop, 10 minutes' walk from his workplace, which can copy 20 pages per minute and charges him one cent per page If Jason's hourly wage is $25 and he needs to distribute 600 pages to other workers, he would: → benefit more by going to the printing shop incur a higher cost going to the printing shop not go to the printing shop as that would waste time copy some himself and take some to the printers AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 18 Jason can copy 10 pages per minute simple economic decisions at the of Time taken: mins 19 Jen spends her afternoon at the beach, paying $1 to rent a beach umbrella and $11 for food and drinks rather than spending an equal amount of money to go to a movie The opportunity cost of going to the beach is: zero, because the money she spent was for food, drinks and an umbrella rather than to enter the beach the $12 she spent on the umbrella, food and drinks → the movie she missed seeing the movie she missed seeing, plus the $12 she spent on the umbrella, food and drinks AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions Time taken: mins Multiple Choice Question Question 19 Jen spends her afternoon at the beach, payin 20 The opportunity cost of an activity is the value of: → the next-best alternative forgone the least-best alternative forgone the difference between the chosen activity and the next-best alternative forgone the alternative one would have preferred to choose Multiple Choice Question Question 20 The opportunity cost of an activity is the v 21 AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions Time taken: mins Full file at https://TestbankDirect.eu/ Page of 25 Lauren is thinking about going to the cinema tonight to see the new Harry Potter film A ticket costs $15 and she will have to cancel her dog-sitting job that pays $30 The cost of seeing the movie is: $15 $30 → $45 $45 minus the benefit of seeing the movie AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 21 Lauren is thinking about going to the simple economic decisions cinema Time taken: mins 22 Amy has bought some land for $100 000 and is deciding to build a house this year If she hires a building supervisor it will cost her $20 000, but if she does the supervising herself she will have to give up half of her work time, for which she is paid an annual salary of $40 000 Based on this information, which of the following is true? She will hire a building supervisor She will supervise the building herself Amy's cost of building the house will be the same even if she supervises the building herself → All of the given answers AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 22 Amy has bought some land for $100 simple economic decisions 000 and is Time taken: mins 23 Alpha Music Company paid $100 000 to Beta Bestrem for recording a single album Now Alpha is thinking of hiring a distributor for $25 000 to sell CDs of that album to various music shops The cost of producing each CD is $2 and cost of distributing to music shops is $1 If Alpha can sell a CD for $5, how many CDs should they sell to cover the opportunity cost of distributing CDs to the shops? 56 250 50 000 → 12 500 25 000 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 23 Alpha Music Company paid $100 000 simple economic decisions to Beta Be Time taken: mins 24 In general, rational decision making requires one to choose the actions that yield the: largest total benefit smallest net benefit smallest average cost → largest economic surplus AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions Time taken: mins Multiple Choice Question Question 24 In general, rational decision making require 25 Microeconomics is a study of: the aggregate economy measuring cost and benefit for all activity exports and imports → individual consumer, firm and market behaviour AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-02 Distinguish between microeconomics and macroeconomics, Question 25 Microeconomics is a and between positive and normative economics study of: Time taken: mins 26 Lisa wants to go to a friend's house this evening, but has promised her mother that she will clean the house during that time Her brother, Bart, has offered to clean the house for her if she will pay him $20 Lisa replies, ‘I'll pay you $10 - and not a cent more!' Which of the following statements is correct? Full file at https://TestbankDirect.eu/ Page of 25 → The $20 represents Lisa's benefit of going to her friend's house this evening The $10 represents Lisa's opportunity cost of cleaning the house this evening The $20 represents Bart's benefit and Lisa's opportunity cost of going to her friend's house this evening The difference between the $20 Bart has asked for to clean the house and the $10 Lisa has offered represents the economic surplus of going to her friend's house this evening AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 26 Lisa wants to go to a friend's house this simple economic decisions evening, Time taken: mins 27 On a long-weekend holiday, all students in Jack's class will be hiring a bus from Wonder Wheels to go to Phillip Island from the Melbourne CBD area Warren, the owner of Wonder Wheels, will have to be paid $600 for each day and Jack's group will stay on Phillip Island for three days Instead of paying for all three days, Jack made an offer of $1200 for the return trip, as while they are on Phillip Island they are not going to use the bus at all Wonder Wheels pays the bus driver $300 per day, uses $100 worth of petrol for a one-way trip to Phillip Island If Wonder Wheels don't take the offer there is no other booking for the bus for three days What would be Warren's likely response? Warren would not accept the offer as his total cost is higher than total benefit → Warren would accept the offer Warren wouldn't want to accept the offer as the bus sits idle for one day None of the given answers AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 27 On a long-weekend holiday, all simple economic decisions students in J Time taken: mins 28 The use of economic models such as the cost-benefit principle means economists believe that: this is exactly how people choose between alternatives → this is a reasonable abstraction of how people choose between alternatives those who explicitly make decisions this way are smarter with enough education, all people will start to explicitly make decisions this way AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 28 The use of economic models such as simple economic decisions the cost- Time taken: mins 29 Jenna decides to see a movie, which costs her $15 for the ticket and has an opportunity cost of $35 After the movie, she says to one of her friends that the movie was not worth it Apparently: Jenna failed to apply the cost-benefit model to her decision Jenna was not rational Jenna had never studied economic decision making → Jenna overestimated the benefits of the movie AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 29 Jenna decides to see a movie, which simple economic decisions costs h Time taken: mins 30 Most of us make sensible decisions most of the time, because: we know the cost-benefit principle → unconsciously we are weighing costs and benefits most people know about the scarcity principle we conduct hypothetical mental auctions when we make decisions AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 30 Most of us make sensible decisions simple economic decisions most of t Time taken: mins 31 Suppose a person makes a choice that seems inconsistent with the cost-benefit principle Which of the following statements represents the most reasonable conclusion to draw? → The person (explicitly or implicitly) overestimated the benefits or underestimated the costs, or both Full file at https://TestbankDirect.eu/ Page of 25 The cost-benefit principle is rarely true The person does not grasp how decisions should be made The person is simply irrational AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-04 State the cost-benefit principle and apply it to simple economic decisions Time taken: mins Multiple Choice Question Question 31 Suppose a person makes a choice that seems i 32 Economics models claim to be a(n): → reasonable abstraction of how people make choices, highlighting the most important factors exact replication of the decision-making process people use interesting blackboard exercise with little application to the real world absolutely correct description of the world AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to simple Question 32 Economics models claim to be economic decisions a(n): Time taken: mins 33 If one fails to account for opportunity costs in decision making, the results gained by applying the cost-benefit rule will be flawed because: Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank the benefits will be overstated costs willatbehttps://TestbankDirect.eu/ understated → the Full file the benefits will be understated the benefits and costs will be understated AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 33 If one fails to account for simple economic decisions opportunity cost Time taken: mins 34 Your classmates from the University of New South Wales are planning to go to the Gold Coast for the break and you are undecided about whether you should go with them The round-trip airfares are $600, but you have frequent-flyer points worth $500 that you could use to pay part of the airfare All other costs for the vacation are exactly $900 The most you would be willing to pay for the trip is $1400 Your only alternative use for your frequent-flyer points is for your trip to Melbourne two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend The Sydney-Melbourne round-trip airfares are $450 If you not use the frequent-flyer points to fly, should you go to the Gold Coast? Yes, your benefit is greater than your cost → No, your benefit is less than your cost Yes, your benefit is equal to your cost None of the given answers AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 34 Your classmates from the range of real-world examples University of New S Time taken: mins 35 Your classmates from the University of New South Wales are planning to go to the Gold Coast for the break and you are undecided about whether you should go with them The round-trip airfares are $600, but you have frequent-flyer points worth $500 that you could use to pay part of the airfare All other costs for the vacation are exactly $900 The most you would be willing to pay for the trip is $1400 Your only alternative use for your frequent-flyer points is for your trip to Melbourne two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend The Sydney-Melbourne round-trip airfares are $450 What is the opportunity cost of using the points for the Gold Coast trip? $100 → $450 $500 $600 Multiple Choice Question Question 35 Your classmates from the University of New S AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a Full file at https://TestbankDirect.eu/ Page of 25 range of real-world examples Time taken: mins 36 Your classmates from the University of New South Wales are planning to go to the Gold Coast for the break and you are undecided about whether you should go with them The round-trip airfares are $600, but you have frequent-flyer points worth $500 that you could use to pay part of the airfare All other costs for the vacation are exactly $900 The most you would be willing to pay for the trip is $1400 Your only alternative use for your frequent-flyer coupon is for your trip to Melbourne two weeks after the break to attend your sister's graduation, which your parents are forcing you to attend If the Sydney-Melbourne round-trip air fair is $350, should you go to the Gold Coast? No, there is a loss of $50 No, there is a loss of $100 No, there is a loss of $350 → Yes, there is an economic surplus of $150 AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 36 Your classmates from the range of real-world examples University of New S Time taken: mins 37 You paid $35 for a ticket (which is non-refundable) to see JAM, a local rock band, in concert on Saturday It turns out that $35 is also the exact value you place on attending the concert Your boss called and she is looking for someone to cover a shift on Saturday at the same time as your concert You will have to work four hours and she will pay you time-and-a-half, which is $9 per hour Should you go to the concert instead of working Saturday? Yes, your benefit is more than your cost Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank → No, your benefit is less than your cost Yes, your benefit is equal to your cost Full file at https://TestbankDirect.eu/ No, because there are no benefits from the concert AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 37 You paid $35 for a ticket world examples (which is non-refu Time taken: mins 38 You paid $35 for a ticket (which is non-refundable) to see JAM, a local rock band, in concert on Saturday It turns out that $35 is also the exact value you place on attending the concert Your boss called and she is looking for someone to cover a shift on Saturday at the same time as your concert You will have to work four hours and she will pay you time-and-a-half, which is $9 per hour What is the opportunity cost of going to the concert? $9 $18 $35 → $36 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 38 You paid $35 for a ticket world examples (which is non-refu Time taken: mins 39 You paid $35 for a ticket (which is non-refundable) to see JAM, a local rock band, in concert on Saturday It turns out that $35 is also the exact value you place on attending the concert Your boss called and she is looking for someone to cover a shift on Saturday at the same time as your concert You will have to work four hours and she will pay you time-and-a-half, which is $9/hr Your economic surplus of going to work on Saturday is: $0 → $1 $9 $35 AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 39 You paid $35 for a ticket world examples (which is non-refu Time taken: mins 40 Matt has decided to purchase his textbooks for the semester His options are to purchase the books via the Internet with next-day delivery to his home at a cost of $175, or to drive to uni tomorrow to buy the books at the bookstore at a cost of Full file at https://TestbankDirect.eu/ Page of 25 $170 Last week he drove to uni to buy a concert ticket because they offered 25 per cent off the regular price of $16 Matt's benefit of buying his books at the bookstore is at least: $4 → $1 $5 $170 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 40 Matt has decided to world examples purchase his textbooks f Time taken: mins 41 Matt has decided to purchase his textbooks for the semester His options are to purchase the books via the Internet with next-day delivery to his home at a cost of $175, or to drive to uni tomorrow to buy the books at the bookstore at a cost of $170 Last week he drove to uni to buy a concert ticket because they offered 25 per cent off the regular price of $16 According to the cost-benefit principle: it would not be rational for Matt to drive to campus to purchase the books because the $5 saving is only per cent of the cost of the books, and that is much less than the 25 per cent he saved on the concert ticket it would be rational for Matt to drive to campus because it costs less to buy the books there than via the Internet it would be rational for Matt to drive to campus because the $5 saving is more than he saved by driving there → to buy the concert ticket it would not be rational for Matt to drive to campus to purchase the books because the cost of gas and his time Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank must certainly be more than the $5 he would save Full file at https://TestbankDirect.eu/ AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 41 Matt has decided to purchase his simple economic decisions textbooks f Time taken: mins 42 Matt has decided to purchase his textbooks for the semester His options are to purchase the books via the Internet with next-day delivery to his home at a cost of $175, or to drive to uni tomorrow to buy the books at the bookstore at a cost of $170 Last week he drove to uni to buy a concert ticket because they offered 25 per cent off the regular price of $16 Assume the minimum that Matt would be willing to accept to drive to the university is equal to the amount he saved on the concert ticket What would be the amount of his economic surplus if he bought his textbooks at the university bookstore rather than via the Internet? $5 → $1 $50 $20 AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 42 Matt has decided to purchase his simple economic decisions textbooks f Time taken: mins 43 A cost that we cannot avoid whether or not an action is taken is called a(n): opportunity cost average cost → sunk cost marginal cost AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 43 A cost that we cannot world examples avoid whether or not a Time taken: mins 44 Suppose that you have purchased a round-trip ticket to Tasmania for the break The ticket is non-refundable and cannot be changed Your family is having a reunion during the same week and you would like to spend time with your family How does the price of the Tasmania trip affect your decision of whether to go to Tasmania or go to the family reunion? → It doesn't, because it's a sunk cost It does; you will lose money if you go to the family reunion It doesn't, because it's the opportunity cost It does, because the cost-benefit principle takes all cost into account Full file at https://TestbankDirect.eu/ Page 10 of 25 AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 44 Suppose that you have world examples purchased a round-trip Time taken: mins 45 Mike gives a non-refundable $100 to ACE Adventures to reserve a raft for a group white-water rafting trip on the New River The raft has room for five people He sells three rafting tickets at $25 each for a total of $75 Mike usually sells four tickets at $25 each and goes on the trip for free Should Mike cancel the trip? No, because he is making $75 Yes, because the $100 is lost no matter what → No, because losing $25 is better than losing $100 Yes, because he will lose $25 on the venture AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 45 Mike gives a nonrange of real-world examples refundable $100 to ACE Adve Time taken: mins 46 Suppose Darlene purchased a computer two weeks ago for $2000 Today she can purchase a new computer that is twice as fast for $1400 also discovers that the of current computer sells second-hand for $1100 The sunk of her current TestShe Bank for Principles Microeconomics 3rd Australian Edition by cost Frank computer is: $0 Full file at https://TestbankDirect.eu/ $1100 → $900 $2000 AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 46 Suppose Darlene purchased range of real-world examples a computer two wee Time taken: mins 47 Ontel engineers proposed developing a 2-gigahertz microprocessor in early 1999 at a cost of $20 million for a working prototype By mid-2000, the $20 million had been spent with no prototype The engineers request an additional $10 million to finish the project For convenience, assume the marginal cost of producing the chip once it is developed is zero A senior executive at Ontel argues that the engineers should only be granted the additional $10 million if Ontel can collect $30 million in revenues after the chip is developed The executive's argument is: correct incorrect; the $20 million already spent is a fixed cost and should be ignored → incorrect; the $20 million already spent is a sunk cost and should be ignored possibly correct; insufficient information to say AACSB: Analyse Difficulty: Medium EQUIS: Analytic Graduate attribute: Problem Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of Question 47 Ontel engineers proposed real-world examples developing a 2-giga Time taken: mins 48 Ontel engineers proposed developing a 2-gigahertz microprocessor in early 1999 at a cost of $20 million for a working prototype By mid-2000, the $20 million had been spent with no prototype The engineers request an additional $10 million to finish the project For convenience, assume the marginal cost of producing the chip once it is developed is zero In early 1999, sunk costs of this project were and in mid-2000, sunk costs were → 0; $20 million 0; $30 million $20 million; $30 million $20 million; $10 million Multiple Choice Question Question 48 Ontel engineers proposed developing a 2-giga AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a range of real- Full file at https://TestbankDirect.eu/ Page 11 of 25 world examples Time taken: mins 49 Ontel engineers proposed developing a 2-gigahertz microprocessor in early 1999 at a cost of $20 million for a working prototype By mid-2000, the $20 million had been spent with no prototype The engineers request an additional $10 million to finish the project For convenience, assume the marginal cost of producing the chip once it is developed is zero In deciding whether to continue the 2-gig chip, Ontel executives should compare the to the expected revenues $20 million spent plus the extra $10 million $20 million spent → extra $10 million $20 million spent plus the extra $10 million plus $5 million for cost overruns AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of Question 49 Ontel engineers proposed real-world examples developing a 2-giga Time taken: mins 50 Onetel engineers proposed developing a 2-gigahertz microprocessor in early 1999 at a cost of $20 million for a working prototype By mid-2000, the $20 million had been spent with no prototype The engineers request an additional $10 million to finish the project For convenience, assume the marginal cost of producing the chip once it is developed is zero If the expected revenues of a 2-gigahertz chip are $15 million, Ontel should: stop development and take a $20 million loss finish development and earn a $5 million profit Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank finish development and earn a $5 million loss and take a $15 million loss → finish Fulldevelopment file at https://TestbankDirect.eu/ AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of Question 50 Onetel engineers proposed real-world examples developing a 2-gig Time taken: mins 51 The marginal benefit of an activity is the: total benefit divided by the level of the activity change in the activity divided by the change in benefits → extra benefit associated with an extra unit of the activity total benefit associated with an extra unit of the activity AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 51 The marginal benefit of world examples an activity is the: Time taken: mins 52 If the marginal costs of one, two and three hours of talking on the phone are $50, $75 and $105, respectively, the total costs for the three hours of talking, respectively, are: $50, $150 and $315 $50, $41.67 and $115 → $50, $125 and $230 $50, $175 and $405 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 52 If the marginal costs of world examples one, two and three Time taken: mins 53 If the total benefits of watching one, two and three football games on TV are 100, 120 and 125, respectively, the marginal benefits are: 100,120 and 125 → 100, 20 and 100, 609 and 41.67 100, 240 and 375 Full file at https://TestbankDirect.eu/ Page 12 of 25 Multiple Choice Question Question 53 If the total benefits of watching one, two a AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a range of realworld examples Time taken: mins 54 The extra benefit that comes from an extra unit of activity is called the of the activity benefit → marginal benefit marginal cost average benefit AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 54 The extra benefit that world examples comes from an extra u Time taken: mins 55 The marginal cost of an activity is the: → change in the cost of the activity that results from an extra unit of the activity same as the total cost of the activity ratio of total for costsPrinciples to the level of of the activity Test Bank Microeconomics 3rd Australian Edition by Frank change in the level of the activity divided by the change in the costs of the activity Full file at https://TestbankDirect.eu/ AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 55 The marginal cost of an world examples activity is the: Time taken: mins 56 The extra cost that results from an extra unit of an activity is the: marginal benefit marginal surplus → marginal cost same as the opportunity cost AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 56 The extra cost that results world examples from an extra un Time taken: mins 57 Dividing the total cost of n units of an activity by n reveals the: average benefit marginal cost units per cost → average cost AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 57 Dividing the total cost of world examples n units of an act Time taken: mins 58 Six Flags, an amusement park, runs a promotion in which you can get two season tickets for the price of one You and your friend both paid one half of the price and got the tickets but you visit the park more often than your friend Compared with your friend, your: sunk cost is lower marginal cost of a visit to the park is lower sunk cost is the same but your marginal cost is lower → average cost per visit is lower AACSB: Analytic Difficulty: Easy Full file at https://TestbankDirect.eu/ Page 13 of 25 Multiple Choice Question Question 58 Six Flags, an amusement park, runs a promoti EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a range of real-world examples Time taken: mins 59 You save $10 on petrol every week since you live close to the bus stop You have class five days a week What is your average benefit (per day) from living close to the bus stop? $10 $5 → $2 $1.43 AACSB: Analytic Difficulty: Easy EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of Question 59 You save $10 on petrol real-world examples every week since you Time taken: mins 60 Use the following information to answer the question Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank Full file at https://TestbankDirect.eu/ The average cost of four units of activity is: $20 → $25 $30 $40 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 60 Use the following world examples information to answer the Time taken: mins 61 Use the following information to answer the question The marginal cost of the third unit of activity is: $30 $25 → $20 $15 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 61 Use the following world examples information to answer the Time taken: mins 62 Use the following information to answer the question Full file at https://TestbankDirect.eu/ Page 14 of 25 The average benefit of three units of activity is: $100 $80 → $60 $40 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 62 Use the following world examples information to answer the Time taken: mins 63 Use the following information to answer the question The marginal benefit of the fifth unit of activity is: $60 Test $50 Bank for Principles of Microeconomics $41 Full file at https://TestbankDirect.eu/ → $5 3rd Australian Edition by Frank AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 63 Use the following world examples information to answer the Time taken: mins 64 Use the following information to answer the question According to the cost-benefit principle, the level of activity that provides the largest net benefit is: unit → units units units AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 64 Use the following world examples information to answer the Time taken: mins 65 Use the following information to answer the question The average cost of five units of activity is: $1 $2 → $3 Full file at https://TestbankDirect.eu/ Page 15 of 25 $4 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 65 Use the following world examples information to answer the Time taken: mins 66 Use the following information to answer the question The marginal cost of the fourth unit of activity is: $1 $2 $3 → $4 AACSB: Analytic Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank Difficulty: Medium EQUIS: Analyse Full file at https://TestbankDirect.eu/ Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 66 Use the following world examples information to answer the Time taken: mins 67 Use the following information to answer the question The average benefit of four units of activity is: $4 → $5 $6 $7 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 67 Use the following world examples information to answer the Time taken: mins 68 Use the following information to answer the question The marginal benefit of the sixth unit of activity is: $1 $2 → $4 $6 AACSB: Analytic Difficulty: Medium Full file at https://TestbankDirect.eu/ Page 16 of 25 Multiple Choice Question Question 68 Use the following information to answer the EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a range of realworld examples Time taken: mins 69 Use the following information to answer the question According to the cost-benefit principle, the level of activity that provides the largest net benefit is: unit → units units units AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List3rd andAustralian explain the common that people encounter Test Bank for Principles of Microeconomics Editionpitfalls by Frank Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 69 Use Full the following world examples file at https://TestbankDirect.eu/ information to answer the Time taken: mins 70 Use the following table to answer the question Total donations raised by three employees are: $43 899 $45 000 $48 911 → $51 963 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 70 Use the following table to world examples answer the quest Time taken: mins 71 Use the following table to answer the question The total labour cost of four employees is: $21 500 $22 000 → $38 000 $44 750 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 71 Use the following table to world examples answer the quest Time taken: mins Full file at https://TestbankDirect.eu/ Page 17 of 25 72 Use the following table to answer the question The President of What'sAMatterU decides to hire fundraisers as long as the average benefit exceeds the average cost, resulting in employees being hired and a net benefit (total donations minus total labour costs) of → 5; $17 080 5; $67 080 4; $60 000 4; $22 000 AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 72 Use the following table to world examples answer the quest Time taken: mins 73 Use the following table to answer the question Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank Full file at https://TestbankDirect.eu/ The marginal benefit (extra donations) of the second employee is: $42 426 $21 213 → $12 426 $11 337 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 73 Use the following table to world examples answer the quest Time taken: mins 74 Use the following table to answer the question The marginal labour cost (extra labour cost) of the fourth employee is: $9500 $10 000 $10 750 → $11 000 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 74 Use the following table to world examples answer the quest Time taken: mins 75 Use the following table to answer the question Full file at https://TestbankDirect.eu/ Page 18 of 25 The Chairman of the Economics Department at What'sAMatterU says that fundraisers should be hired as long as their marginal donations exceed their marginal labour costs Following this criterion, employees are hired and net benefits are 1; $22 000 → 2; $25 426 3; $25 426 2; $3476 AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 75 Use the following table to world examples answer the quest Time taken: mins 76 Use the following table to answer the question Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank Full file at https://TestbankDirect.eu/ The net benefit of hiring fundraisers is largest when _ employees are hired → AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 76 Use the following table to world examples answer the quest Time taken: mins 77 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: → inconsistent reasoning; saving $20 is saving $20 the proper application of the cost-benefit principle rational choice, because in the first case he saves 40 per cent and in the second case he saves per cent marginal cost equals marginal benefit thinking AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 77 Tony notes that an world examples electronics store is off Time taken: mins 78 Suppose a retail store was offering 10 per cent off all prices on all goods The incentive to take advantage of the 10 per cent saving is: unrelated to the list price of one good inversely related to the list price of a good → directly related to the list price of a good independent of the list price Multiple Choice Question Question 78 Suppose a retail store was offering 10 per AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a range of real- Full file at https://TestbankDirect.eu/ Page 19 of 25 world examples Time taken: mins 79 A cost that has no opportunity cost is a(n): marginal cost total cost → sunk cost average cost AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 79 A cost that has no opportunity cost simple economic decisions is a(n) Time taken: mins 80 IBM employs Pam to assemble personal computers Pam can assemble one computer if she works one hour, four computers in two hours, eight computers in three hours, ten computers in four hours and 11 computers in five hours Each computer consists of a motherboard that costs $200, a hard drive that costs $100, a case costing $20, a monitor that costs $200, a keyboard at $60 and a mouse that costs $20 The cost of employing Pam is $40 per hour What is the additional cost of producing the computers Pam assembles during her third hour of work? $1200 $1240 $2400 → $2440 Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank AACSB: Analytic Difficulty: Medium EQUIS: Analyse Full file at https://TestbankDirect.eu/ Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 80 IBM employs Pam to range of real-world examples assemble personal comput Time taken: mins 81 IBM employs Pam to assemble personal computers Pam can assemble one computer if she works one hour, four computers in two hours, eight computers in three hours, ten computers in four hours and 11 computers in five hours Each computer consists of a motherboard that costs $200, a hard drive that costs $100, a case costing $20, a monitor that costs $200, a keyboard at $60 and a mouse that costs $20 The cost of employing Pam is $40 per hour What is the marginal cost of producing one computer that Pam assembles during her fourth hour of work? $540 $600 → $620 None of the given answers AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 81 IBM employs Pam to range of real-world examples assemble personal comput Time taken: mins 82 IBM employs Pam to assemble personal computers Pam can assemble one computer if she works one hour, four computers in two hours, eight computers in three hours, ten computers in four hours and 11 computers in five hours Each computer consists of a motherboard that costs $200, a hard drive that costs $100, a case costing $20, a monitor that costs $200, a keyboard at $60 and a mouse that costs $20 The cost of employing Pam is $40 per hour IBM sells each computer for $620 For how many hours should IBM employ Pam to maximise its benefit from her employment? → AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 82 IBM employs Pam to range of real-world examples assemble personal comput Time taken: mins 83 IBM employs Pam to assemble personal computers Pam can assemble one computer if she works one hour, four computers in two hours, eight computers in three hours, ten computers in four hours and 11 computers in five hours Each computer consists of a motherboard that costs $200, a hard drive that costs $100, a case costing $20, a monitor that costs $200, a keyboard at $60 and a mouse that costs $20 The cost of employing Pam is $40 per hour IBM sells each computer for $640 For how many hours should IBM employ Pam to maximise its benefit from her employment? Full file at https://TestbankDirect.eu/ Page 20 of 25 → AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people Multiple Choice Question encounter when applying the cost-benefit principle and recognise these pitfalls in a Question 83 IBM employs Pam to range of real-world examples assemble personal comput Time taken: mins 84 If Jane works for six hours she can rent 12 apartments, and if she works for seven hours she can rent 15 apartments The marginal benefit of the seventh hour of Jane's work equals: 12 apartments 15 apartments 27 apartments → apartments AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 84 If Jane works for six hours world examples Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank she can rent 12 Time taken: mins 85 Jay has estimated that the additional benefit of writing 50 more lines of computer programming code is $20 and the Full file at https://TestbankDirect.eu/ additional cost is $10 He should: not write the code because it would not be a rational choice write the code because it would be a rational choice and an optimal quantity → write the code because it would be a rational choice but it is not necessarily an optimal quantity not write the code because it would not be a rational choice but it would be an optimal quantity AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 85 Jay has estimated that the world examples additional benef Time taken: mins 86 The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same, that is, CPU speed is the only source of variation The marginal benefit of upgrading from a 600 Mhz computer to a 700 Mhz computer is: $1500 → $500 $50 $2 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 86 The following table shows world examples the relationship Time taken: mins 87 The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same, that is, CPU speed is the only source of variation The total benefit of an 800 Mhz computer is: Full file at https://TestbankDirect.eu/ Page 21 of 25 → $400 $500 $800 $1900 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 87 The following table shows world examples the relationship Time taken: mins 88 The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same; that is, CPU speed is the only source of variation The total cost of a 700 Mhz computer is: → $1000 $900 $300.Bank for Principles Test $100 of Microeconomics 3rd Australian Edition by Frank Full file at https://TestbankDirect.eu/ AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 88 The following table shows world examples the relationship Time taken: mins 89 The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same, that is, CPU speed is the only source of variation The marginal cost of upgrading from a 700 to an 800 Mhz computer is: $600 $500 → $400 $200 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 89 The following table shows world examples the relationship Time taken: mins 90 The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same, that is, CPU speed is the only source of variation Application of the cost-benefit principle would lead one to purchase a computer because 900 Mhz; the total benefit exceeds the total cost 700 Mhz; the marginal benefit is $500 and the marginal cost is $100 600 Mhz; it is certainly fast enough → 800 Mhz; the marginal benefits and marginal costs are equal Full file at https://TestbankDirect.eu/ Page 22 of 25 Multiple Choice Question Question 90 The following table shows the relationship AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter when applying the cost-benefit principle and recognise these pitfalls in a range of realworld examples Time taken: mins 91 The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same, that is, CPU speed is the only source of variation Choosing the 1000 Mhz computer would be inefficient because: → the marginal benefit is less than the marginal cost the marginal benefit is equal to the marginal cost is impossible to tell the difference compared with a 600 Mhz computer it will be surpassed by an 1100 Mhz computer very soon AACSB: Analytic Difficulty: Medium EQUIS: Analyse Test Bank for Principles of Microeconomics 3rd Australian Edition FrankProblem solving Graduateby attribute: Learning Objective: 01-06 List and explain the common pitfalls that people encounter Full file at https://TestbankDirect.eu/ Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 91 The following table shows world examples the relationship Time taken: mins 92 The following table shows the relationship between the speed of a computer's CPU and the benefits and costs Assume that all other features of the computer are the same, that is, CPU speed is the only source of variation Buying the 700 Mhz computer would be inconsistent with the cost-benefit principle because: the total benefit exceeds the total cost the average benefit exceeds the average cost → the marginal benefit exceeds the marginal cost the difference between the total benefit and the total cost is positive AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 92 The following table shows world examples the relationship Time taken: mins 93 Jack has a ticket to see Smashmouth for which he paid $30 yesterday He takes an unpaid day off from work to get ready for the concert When he arrives at the concert, five different people offer him $70 for his ticket On arrival at the concert, the cost to Jack of seeing Smashmouth is: $30 $40 → $70 $70 plus his forgone earnings AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 93 Jack has a ticket to see world examples Smashmouth for whi Time taken: mins 94 Catherine and Nancy both own homes with similar-sized lawns Catherine mows her own lawn while Nancy hires someone to mow hers Assume both women are rational decision makers Which is the best explanation of the different decisions they make? → The opportunity cost of Nancy's time is higher than her cost to hire someone to mow the lawn Nancy can get her lawn mown for less than Catherine Full file at https://TestbankDirect.eu/ Page 23 of 25 Nancy doesn't own a lawnmower Nancy earns more than Catherine does Catherine's overall level of economic benefit must be lower AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 94 Catherine and Nancy both own homes simple economic decisions with simi Time taken: mins 95 What is the opportunity cost of living in a house that you already own? Zero, because you already own it It mostly depends on current mortgage rates → The rent you could receive if you rented the house out to someone else It depends on how much you like living there AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 95 What is the opportunity cost of simple economic decisions living in a Time taken: mins 96 Jody has purchased a non-refundable $25 ticket to attend a Powderfinger concert on Friday evening Subsequently, she is asked to goTest to dinner andfor dancing at no expense to her If she uses cost-benefit analysisEdition to choose Bank Principles of Microeconomics 3rd Australian bybetween Frankgoing to the concert and going on the date, she should: onlyat thehttps://TestbankDirect.eu/ entertainment value of the concert in the opportunity cost of going on the date → include Full file include the cost of the ticket plus the entertainment value of the concert in the opportunity cost of going on the date include only the cost of concert ticket in the opportunity cost of going on the date include neither the cost of the ticket nor the entertainment value of the concert in the opportunity cost of going on the date AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 96 Jody has purchased a non-refundable simple economic decisions $25 tick Time taken: mins 97 Sean studied for five hours for his first Economics test and his test score was 85; six hours for his second Economics test and scored 90; and seven hours for his third Economics test and scored 95 He also studied five hours for his first Maths test and his test score was 68; six hours for his second Maths test and scored 78; and seven hours for his third Maths test and scored 88 The average benefit per hour spent studying for the Economics tests was and the average benefit per hour spent studying for the Maths tests was → 15; 13 5; 10 90; 78 13; 15 AACSB: Analytic Difficulty: Medium EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 97 Sean studied for five world examples hours for his first Ec Time taken: mins 98 Studying government policies on building new roads and highways is: macroeconomics → microeconomics government economics marginal economics Multiple Choice Question Question 98 Studying government policies on building new 99 AACSB: Communicate Difficulty: Medium EQUIS: Communication Graduate attribute: Communication Learning Objective: 01-02 Distinguish between microeconomics and macroeconomics, and between positive and normative economics Time taken: mins Full file at https://TestbankDirect.eu/ Page 24 of 25 In a small business office there are only two computers but six workers who from time to time need to use the computers It has become very frustrating to figure out who should use the computers, and when and for how long Mandy, the manager of the company, proposed that everyone will have to pay a price to be able to use the computer → This rule will work because it creates a market for computer usage in that office This rule will not work because employee would not want to pay to work This is the most absurd solution the employees have ever heard This rule is good but it will be hard to work out the actual price AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Multiple Choice Question Learning Objective: 01-04 State the cost-benefit principle and apply it to Question 99 In a small business office there are simple economic decisions only tw Time taken: mins 100.An economic naturalist is described as someone who: uses economic arguments to protect forests and wetlands from development has a natural talent for drawing graphs applies economic insights to everyday life → studies the process of natural selection in a marginal cost and marginal benefit framework AACSB: Communicate Difficulty: Easy EQUIS: Communication Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-02 Distinguish between microeconomics and Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank Question 100 An economic naturalist is macroeconomics, and between positive and normative economics described as someo Time taken: mins Full file at https://TestbankDirect.eu/ 101.Which of the following statement is true? All economic systems must determine methods to deal with competing claims to scarce resources If resources are allocated efficiently, they are allocated to their most valuable use Both A and B → If resources are allocated efficiently, all wants are satisfied AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-03 State the scarcity principle and explain its Question 101 Which of the following statement implications for decision making is true? Time taken: mins 102.The use of economic models, like thinking at the margin, means that economists believe that: people should use this principle to make decisions after studying economics, more people will consciously make decisions by using the model the model helps predict or explain what people all of the given answers are correct → AACSB: Communication Difficulty: Easy EQUIS: Communicate Graduate attribute: Communication Multiple Choice Question Learning Objective: 01-03 State the scarcity principle and explain its Question 102 The use of economic models, like implications for decision making thinking at Time taken: mins 103.A student attends the local college instead of working as a customer service representative making $20,000 Tuition is $15,000 Books and fees are $2,000 He lives at home What is the out-of-pocket cost of going to college for this student? $15,000 $17,000 → $20,000 $37,000 AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 103 A student attends the world examples local college instead Time taken: mins 104.A student attends the local college instead of working as a customer service representative making $20,000 Tuition is $15,000 Books and fees are $2,000 He lives at home What is the opportunity cost of going to college for this student? $15,000 $17,000 Full file at https://TestbankDirect.eu/ Page 25 of 25 → $20,000 $37,000 AACSB: Analytic Difficulty: Hard EQUIS: Analyse Graduate attribute: Problem solving Learning Objective: 01-06 List and explain the common pitfalls that people encounter Multiple Choice Question when applying the cost-benefit principle and recognise these pitfalls in a range of realQuestion 104 A student attends the world examples local college instead Time taken: mins 105.Jerome's favourite flavour of ice cream is chocolate His second-favourite flavour is black cherry, and his third-favourite is coffee If he cannot get one of those favours, he would rather not eat ice cream If Jerome goes to a well-stocked ice cream store and gets chocolate, what is his opportunity cost? There is never an opportunity cost when you eat ice cream Chocolate Black cherry → Coffee Multiple Choice Question Question 105 Jerome's favourite flavour of ice cream is chocola AACSB: Communication Difficulty: Medium EQUIS: Communicate Graduate attribute: Communication Learning Objective: 01-03 State the scarcity principle and explain its implications for decision making Time taken: mins Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank Full file at https://TestbankDirect.eu/ Full file at https://TestbankDirect.eu/ ... implications for decision making Time taken: mins Test Bank for Principles of Microeconomics 3rd Australian Edition by Frank Full file at https://TestbankDirect.eu/ Full file at https://TestbankDirect.eu/... extra unit of the activity same as the total cost of the activity ratio of total for costsPrinciples to the level of of the activity Test Bank Microeconomics 3rd Australian Edition by Frank change... benefit of the fifth unit of activity is: $60 Test $50 Bank for Principles of Microeconomics $41 Full file at https://TestbankDirect.eu/ → $5 3rd Australian Edition by Frank AACSB: Analytic Difficulty: