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Economics assumes people and firms:  
A. use all available information to achieve their goals, respond to incentives, and make decisions by comparing total benefits with total costs. 
B. use all available information to achieve their goals, respond to incentives, and make decisions by continuing any activity up to the point where the marginal benefit equals zero.  
C. know everything, respond to incentives, and make decisions by comparing marginal benefits with marginal costs. 
D are rational, respond to incentives, and make all-or-nothing decisions.  
E. are rational, respond to incentives, and make decisions by comparing marginal benefits with marginal costs.

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Patrina Schowalter
Patrina SchowalterLv2
16 Apr 2020
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Related questions

Economists assume that rational people:

A) never use all available information as they act to achieve their goals.

B) only weigh the benefits and costs of the most desirable alternative actions.

C) to respond to economic incentives.

D) undertake activities that benefit others and hurt themselves.

According to neuroeconomics,

Select one:

a. logical decisions take place in the limbic system or amygdale, and emotional decisions take place in the prefrontal cortex.

b. both logical decisions and emotional decisions take place in the limbic system or amygdala.

c. both logical decisions and emotional decisions take place in the prefrontal cortex.

d. logical decisions take place in the prefrontal cortex, and emotional decisions take place in the limbic system or amygdala.

e. None of the above.

In comparing perfect competition and monopoly, which of the following is true?

Select one:

a. Monopolies automatically earn profits; perfectly competitive firms do not.

b. In perfect competition, profits will disappear in the long run as new firms enter the market; in a monopoly, profits may exist in the long run.

c. In the short run, both monopoly and perfect competition attempt to minimize total costs.

d. In the long run, both monopoly and perfect competition produce at the minimum of the average-total-cost curve.

e. Neither monopoly nor perfect competition can sustain positive economic profits in the long run

The quantity supplied is

Select one:

a. the amount sellers are willing and able to offer at a given price, during a particular time period, everything else held constant.

b. the amount sellers are willing and able to offer for sale at all possible prices.

c. a set of price and quantity-supplied combinations, everything else held constant.

d. a list of prices and the corresponding quantities supplied.

e. a downward-sloping line that relates expenditures to different levels of output.

Efficiency implies that goods and services are allocated

Select one:

a. to those with the ability to pay.

b. to those with the greatest need for the good or service.

c. equally throughout society.

d. in the most cost-effective manner.

e. by government in such a way that the marginal social benefit equals the marginal social cost for each good and service.

Assume a reserve requirement of 25 percent. If a bank has zero excess reserves and $100,000 in total cash reserves, then its deposits must equal

Select one:

a. $100,000.

b. $250,000.

c. $400,000.

d. $25,000.

e. $750,000.

When economists describe the process of consumer choice, they

Select one:

a. portray people as simple, methodical, and robot-like consumers who always behave in perfectly predictable ways.

b. are asserting the simple fact that consumers do have to decide which goods and services to purchase with their limited incomes and people do select the options that give them the greatest utility.

c. point out that consumers rarely consider utility in their purchase decisions.

d. are asserting that price is the only variable consumers consider in making their purchasing decisions.

e. admit that there is no credible economic theory to explain the phenomenon.

Unemployment will decrease if

Select one:

a. actual GDP increases faster than potential GDP.

b. actual GDP increases at the same rate as potential GDP.

c. the GDP gap widens.

d. actual GDP increases less than potential GDP.

e. actual GDP decreases and potential GDP remains the same.

1. When economists speak of "marginal," they mean
a. Opportunity.
b. Scarcity.
c. Incremental.
d. Unimportant.

2. Managers undertake an investment only if
a. Marginal benefits of the investment are greater than zero.
b. Marginal costs of the investment are greater than marginal benefits of the investment.
c. Marginal benefits are greater than marginal costs.
d. Investment decisions do not depend on marginal analysis.

3. A firm produces 500 units per week. It hires 20 full-time workers (40 hours/week) at an hourly wage of $15. Raw materials are ordered weekly, and they cost $10 for every unit produced. The weekly cost of the rent payment for the factory is $2,250. How do the overall costs break down?
a. Total variable cost is $17,000; total fixed cost is $2,250; total cost is $19,250.
b. Total variable cost is $12,000; total fixed cost is $7,250; total cost is $19,250.
c. Total variable cost is $5,000; total fixed cost is $14,250; total cost is $19,250.
d. Total variable cost is $5,000; total fixed cost is $2,250; total cost is $7,250.

4. Total costs increase from $1,500 to $1,800 when a firm increases output from 40 to 50 units. Which of the following is true if marginal cost is constant?
a. FC = $100
b. FC = $200
c. FC = $300
d. FC = $400

5. A manager of a clothing firm is deciding whether to add another factory in addition to one already in production. The manager would compare
a. The total benefits gained from the two factories to the total costs of running the two factories.
b. The incremental benefit expected from the second factory to the total costs of running the two factories.
c. The incremental benefit expected from the second factory to the cost of the second factory.
d. The total benefits gained from the two factories to the incremental costs of running the two factories.

6. A firm is thinking of hiring an additional worker to their organization who they believe can increase total productivity by 100 units a week. The cost of hiring him or her is $1,500 per week. If the price of each unit is $12,
a. The MR of hiring the worker is $1,500.
b. The MC of hiring the worker is $1,200.
c. The firm should not hire the worker since MB < MC.
d. All the above

7. A retailer has to pay $9 per hour to hire 13 workers. If the retailer only needs to hire 12 workers, a wage rate of $7 per hour is sufficient.
What is the marginal cost of the 13th worker?
a. $117
b. $9
c. $33
d. $84

8. If a firm's average cost is rising, then
a. Marginal cost is less than average cost.
b. Marginal cost is rising.
c. Marginal cost is greater than average cost.
d. The firm is making an economic profit.

9. After the first week of his MBA Managerial Economics class, one of your pharmaceutical sales representatives accuses you of committing the sunk-cost fallacy by refusing to allow him to reduce price to make what he considers to be a really tough sale. Which of the following suggests the sales representative may be right?
a. Most of the costs of drug development are sunk, not fixed.
b. Sales representatives are paid a sales commission on revenue, so they don't care about the costs of drug development.
c. Sales representatives don't worry that a low price today may make it more difficult for the company's other sales representatives to charge higher prices to their customers, tomorrow.
d. Sales representatives think only about one thing, sales.

10. A company is producing 15,000 units. At this output level, marginal revenue is $22, and the marginal cost is $18. The firm sells each unit for $48 and average total cost is $40.
What can we conclude from this information?
a. The company is making a loss.
b. The company needs to cut production.
c. The company needs to increase production.
d. Not enough information is provided.

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