Econ 002 - Principles of Macroeconomics » Winter 2021 » Module 2 Quiz

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Question #1
Which is a true statement about marginal cost?
A.   The amount of benefit a person receives from a good or service remains constant.
B.   It is the difference (or change) in cost of a different choice.
C.   It is the difference (or change) in what you receive from a different choice.
Question #2
Hal and Gavin are siblings who own a mattress recycling company. Demand has been increasing for their services and the brothers are contemplating whether to open up an additional mattress drop off site in the downtown area. They estimate it would add $1 million in expenses with their profit increasing by $150 thousand each year for the next 5 years (all other things equal). Hal and Gavin decide
A.   to open a mattress drop off site downtown because the expected marginal benefit is greater than the estimated marginal cost.
B.   to open a mattress drop off site downtown because the marginal cost of the new location is less than other similar projects.
C.   to not open a mattress drop off site downtown because the marginal costs prove to be too high.
Question #3
Juan has a monthly budget of $100 to spend on entertainment. A concert ticket costs $20 while a movie ticket costs $10. This month Juan has attended one concert and 5 movies so far. If Juan decides to only go to movies for the rest of the month. How many movie tickets can he afford to purchase and stay within his budget?
A.   Three tickets.
B.   One and a half tickets.
C.   Thirty tickets.
Question #4
Budget constraints impose scarcity. They are based upon
A.   the prices of the items purchased.
B.   the accessibility of the items purchased.
C.   how much utility one more unit of a good will provide.
Question #5
Which of the following statements is positive?
A.   There is a limit to the income each year to which the FICA tax applies, but that is fair, since there is a limit to social security benefits.
B.   Social security benefits are not taxed.
C.   I am absolutely positive that there is a better way.
Question #6
A rock star intentionally sets her ticket prices below what would be necessary to sell out her shows. How might this be justified by a manager whose goal is to maximize long-term profit?
A.   The revenue sacrificed represents a very small share of the show’s revenues.
B.   The revenue sacrificed will help to make the audience more diverse.
C.   The revenue sacrificed is worth the boost it gives to her image as lines form for tickets.
Question #7
It is said that the rational consumer will act according to his or her self-interest, and that self-interest can include a concern for one’s family and friends, but not often society as a whole. Which of the following illustrates this type of decision?
A.   The rental of recreational vehicles for use in national parks is responsive to concerns of noise pollution.
B.   Our time was very valuable at that moment, but we stopped to put out the fire before it spread.
C.   The boat rental was worth the additional fish caught, regardless of how little fish we left behind.
Question #8
Normative statements are based upon
A.   what can be demonstrated to be true.
B.   conjecture.
C.   value judgments.
Question #9
Kayden decided to attend college and gain a degree in accounting. He is now starting his degree. The yearly cost of tuition is $10,000 and he left his auto mechanic shop management job giving up a $32,000 a year to attend college. Kayden’s decision resulted in
A.   paying $10,000 in opportunity cost per year to attend college.
B.   an opportunity cost to attend college of $22,000 per year.
C.   an opportunity cost to attend college of $42,000 per year.
Question #10
Making an economically rational decision requires
A.   considering the impact of one’s decisions on society.
B.   weighing prospective benefits and costs to oneself.
C.   always considering the long-run.
Question #11
The construction estimator told the storage unit owner that building another section of storage units will likely add 100 more storage space renters to the bottom line. The rational storage business owner considered the rental prices of an additional 100 units, but he would decide to add more units if and only if
A.   the total benefits from all storage units are greater than the the total cost of all storage units.
B.   the marginal benefit is greater than the marginal cost of additional units.
C.   demand for additional storage units from one more storage building (the marginal product) is rising.
Question #12
Marcus is considering which college major to choose. In taking a rational approach, Marcus should consider
A.   the benefit each major would bring and the cost of the degree.
B.   minimizing the length of time it will take to complete the degree.
C.   soley the monetary cost of the college degree is all Marcus needs to consider.
Question #13
If a city government spends a good deal of money on crime prevention and also on infrastructure maintenance, then spending even more money on crime prevention should result in
A.   relatively small gains in crime prevention.
B.   significant gains in infrastructure maintenance.
C.   significant gains in crime prevention.
Question #14
Scarcity is imposed on individual households in the form of income and
A.   the prices of the goods that a person may purchase.
B.   utility.
C.   sunk costs.
Question #15
Marginal benefit is
A.   the average benefit that each unit of something provides.
B.   the additional benefit that one more unit of something will provide.
C.   the change in the total benefit that a company can receive by producing another unit of product.
Question #16
The additional benefit that one more unit of something will provide is known as
A.   marginal cost.
B.   marginal benefit.
C.   economic certainty.

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