C) eliminating the additional cost when making a decision.
D) determining the total benefits of a decision.
E) comparing the benefits from the social interest to the benefits from the person's self-interest.
Answer: A
Topic: On the margin
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
27) In making your decision whether to take a trip during spring break, you compare all the other activities you could undertake. As a result, you
A) are making a choice on the margin.
B) limit the cost and the benefits you can gain.
C) are not making a rational choice.
D) do not face an opportunity cost.
E) must have made a choice in the social interest.
Answer: A
Topic: On the margin
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
28) To make a rational choice, a person
A) compares the extra benefits of one more unit to the extra costs of one more unit.
B) adds the total benefits and the total costs and then compares the two totals.
C) adds the total benefits to determine if the total is large enough.
D) adds the total costs to determine if the total is small enough.
E) takes account of all benefits and all opportunity costs, including both marginal costs and sunk costs.
Answer: A
Topic: Making rational choices
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
29) In order to determine whether to major in economics, a rational individual compares the ________ of the decision.
A) marginal benefit and marginal cost
B) opportunity cost and the sunk cost
C) positive benefits and normative costs
D) normative benefits and positive costs
E) self-interest and social-interest
Answer: A
Topic: Making rational choices
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
30) In order to make a rational choice, people must
A) only know what they want.
B) be able to afford the choice decided upon.
C) decide quickly without wasting time.
D) compare marginal costs and marginal benefits.
E) determine what is in the social interest.
Answer: D
Topic: Making rational choices
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
31) Instead of studying for an additional two hours for the economics final, Leann decides to watch a movie. Leann is making
A) a decision that does not involve an opportunity cost.
B) a rational decision if her marginal cost from the movie is greater than her marginal benefit.
C) a rational decision if her marginal benefit from the movie is greater than her marginal cost.
D) an irrational decision because studying is more important than watching a movie.
E) a decision that is not on the margin because she will see the entire movie.
Answer: C
Topic: Making rational choices
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
32) When Gabriel made a rational choice to spend his entire allowance on candy bars, he did so by comparing the
A) benefits of the candy bars to the desires he had for the candy bars.
B) marginal benefits of the candy bars to the marginal costs of the candy bars.
C) opportunity costs of the candy bars to the scarcity of the candy bars.
D) benefits of the candy bars to the scarcity candy bars.
E) self-interest to the social interest.
Answer: B
Topic: Making rational choices
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
33) As part of its proposal to win the 2012 Olympics, London developed a carbon offset plan to reduce the Games' impact on the environment. In 2011, the organizers decided to drop this plan to reduce emissions. We can conclude that
A) the marginal cost of reducing emissions exceeded the marginal benefits of reducing emissions.
B) the organizers are not making a rational decision.
C) the organizers are ignoring a sunk cost.
D) there are no incentives to reduce carbon emissions.
E) it is difficult to calculate the cost of reducing emissions.
Answer: A
Topic: Making rational choices
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
34) Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing.