ANSWER:
c
30. Ivan has inherited his grandmother's 1963 Chevrolet Corvette, which he values at $60,000. Samantha is interested in buying such a car and is willing to pay up to $55,000. Ivan hears Samantha is looking for this particular car and offers to sell it to her for $70,000. A voluntary economic exchange _____ between Ivan and Samantha because _____ positive economic surplus from the transaction.
a.
occurs; both Ivan and Samantha receive
b.
occurs; only Samantha receives
c.
does not occur; only Ivan receives
d.
does not occur; neither Ivan nor Samantha receives
ANSWER:
c
31. According to the cost-benefit principle, framing effects or how a choice is described, should
a.
affect a decision.
b.
not affect a decision.
c.
be considered costs.
d.
be considered benefits.
ANSWER:
b
32. You are considering whether you should go out to dinner at a restaurant with your friend. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $15. You value the restaurant meal at $30 and the time spent with your friend at $50. You should ____ to dinner with your friend because the benefit of doing so is _____ than the cost.
a.
go; greater
b.
go; less
c.
not go; greater
d.
not go; less
ANSWER:
a
33. You are thinking of going out to dinner at a restaurant with your friends. The meal is expected to cost you $50, you typically leave a 20% tip, and a round-trip Uber ride will cost you $20. You value the restaurant meal at $20, and the time spent with your friends at $30. If you did not go out to the restaurant, you would eat at home using groceries that cost you $10. You should ____ to dinner with your friends because the benefit of doing so is _____ than the cost.
a.
go; greater
b.
go; less
c.
not go; greater
d.
not go; less
ANSWER:
d
34. It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but because of the weather the surcharge is twice the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost.
a.
walk; less
b.
walk; more
c.
take an Uber; less
d.
take an Uber; more
ANSWER:
d
35. It is a rainy day, and you are considering taking an Uber one mile to meet some friends. You have decided you are willing to pay $20 to avoid getting wet from the rain. The trip would normally cost you $8, but due to the weather the surcharge is triple the regular cost. You should _____ because the benefit to you of taking the Uber is _____ than the cost.
a.
walk; less
b.
walk; more
c.
take an Uber; less
d.
take an Uber; more
ANSWER:
a
36. Which principle tells you that the true cost of something is the next best alternative you have to give up to get it?
a.
The cost-benefit principle.
b.
The opportunity cost principle.
c.
The marginal principle.
d.
The interdependence principle.
ANSWER:
b
37. The opportunity cost principle states that the true cost of something is the
a.
next best alternative you have to give up to get it.
b.
least desired alternative you have to give up to get it.
c.
economic surplus you give up to get it.
d.
economic surplus you receive from getting it.
ANSWER:
a
38. Decisions should reflect the _____ costs, rather than just the _____ costs.