Question

Q1 after Alistair earned his BA, he had to decide whether to accept the offer of a job that will pay him $45,000 per year or spend an additional two years earning an MBA. If he decides to pursue the graduate degree, his annual expenses for tuition, books, board, and lodging will be $32,000. Alistair has been offered a scholarship for $10,000 per year, but to pay the remaining $22,000 per year, he would have to cash in savings bonds that his grandparents have given him that have been earning $500 in interest per year. The annual opportunity cost of earning his MBA is:

1-$67,500.

2- $77,000.

3-$99,000.

4-$77,500.

Q3 Which statement about opportunity cost is NOT true?

1-Opportunity cost may be larger than monetary cost.

2-Opportunity cost includes both explicit and implicit costs.

3-The real or opportunity cost of something is what you must give up to get it.

4-Opportunity cost is synonymous with explicit costs.

Q3 If goods A and B are substitutes, a decrease in the price of good B will

increase the demand for good A.

increase the demand for good B.

decrease the demand for good A.

increase the demand for good B and decrease the demand for good A.

Q4 Suppose that, as incomes in a community increase, the demand for taxi service increases and the demand for bus service decreases. From this, it can be concluded that:

Both taxi service and bus service are inferior goods.

Both taxi service and bus service are normal goods.

Taxi service is a normal good; bus service is an inferior good.

Taxi service is an inferior good; bus service is a normal good.

Q5In economics, a marginal value refers to:

the value associated with an unimportant, or marginal, activity.
	a value entered as an explanatory item in the margin of a balance sheet or other accounts.
	the value associated with one more unit of an activity.
	a value that is most appropriately identified in a footnote. Q6 The terms decrease in demand and decrease in quantity demanded can be used interchangeably. True or false