72. The marginal principle breaks quantity decisions into iterative decisions that use the
a.
cost-benefit principle.
b.
opportunity cost principle.
c.
interdependence principle.
d.
sunk cost evaluation.
ANSWER:
a
73. The rational rule summarizes the marginal principle. It says that if something is worth doing, keep doing it until your marginal
a.
benefits equal your marginal costs.
b.
benefits exceed your marginal costs.
c.
benefits are zero.
d.
costs are less than your marginal benefits.
ANSWER:
a
74. The rational rule suggests you should continue with an activity until your _____ benefit _____ your marginal cost.
a.
total; equals
b.
total; exceeds
c.
marginal; equals
d.
marginal; is less than
ANSWER:
c
75. Ron is buying jeans online and has to decide how many to buy. He should buy an additional pair if the
a.
marginal benefit of the next pair is less than the price of the jeans.
b.
marginal benefit of the next pair is at least as high as the price of the jeans.
c.
total benefit when purchasing one more pair is less than the total cost of the jeans.
d.
total benefit when purchasing one more pair is at least as high as the total cost of the jeans.
ANSWER:
b
76. Taryn is buying shirts online and has to decide how many shirts to buy. She should buy another shirt if the
a.
marginal benefit of the next shirt is less than the price of the shirt.
b.
marginal benefit of the next shirt is at least as high as the price of the shirt.
c.
total benefit when purchasing one more shirt is less than the total cost of the shirts.
d.
total benefit when purchasing one more shirt is at least as high as the total cost of the shirts.
ANSWER:
b
77. Following the rational rule, the economic surplus is maximized when
a.
total benefits equal total costs.
b.
total benefits exceed total costs.
c.
marginal benefits equal marginal costs.
d.
marginal benefits exceed marginal costs.
ANSWER:
c
78. To maximize economic surplus, keep increasing output as long as
a.
total benefits equal total costs.
b.
total benefits exceed total costs.
c.
marginal benefits equal marginal costs.
d.
marginal benefits exceed marginal costs.
ANSWER:
d
79. When faced with a quantity decision, the economic surplus stops increasing when
a.
total benefits equal to total costs.
b.
total benefits exceed total costs.
c.
marginal benefits equal marginal costs.
d.
marginal benefits exceed marginal costs.
ANSWER:
c
80. When faced with a quantity decision, the economic surplus is always maximized by following the
a.
Rational Rule.
b.
framing effect.
c.
opportunity cost principle.
d.
interdependence principle.
ANSWER:
a
81. The cost of your favorite coffee is $6.50 per cup at the coffee shop. The marginal cost of each cup you drink is _____. The first cup of coffee you drink gives you a marginal benefit of $8. The marginal benefit from the second cup is $6, $4 from the third, $2 from the fourth, and $0 from the fifth. You should drink _____ cups of coffee.
a.
$6.50; one
b.
$0; five
c.
$1; six
d.
$6.50; five