A) the wages you would have earned from working.
B) the lower grade earned by not studying.
C) the wages you would have earned from working and the lower grade earned by not studying.
D) the value of the trip.
E) We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.
Answer: E
Topic: Opportunity cost
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
9) If Jessie studies economics for two hours instead of going to the movies with her friends, then
A) the benefit of studying is the missed movie.
B) the opportunity cost of studying is the missed movie.
C) Jesse definitely is making a rational choice.
D) Jessie is ignoring a sunk cost.
E) Jessie is not responding to any incentives.
Answer: B
Topic: Making rational choices
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
10) The value of the best thing that a person must give up when making a decision is known as the ________ cost.
A) direct
B) benefit
C) opportunity
D) explicit
E) sunk
Answer: C
Topic: Opportunity cost
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
11) Ali decides to attend the one-hour review session for microeconomics instead of working at his job. His job pays him $10 per hour. Ali's opportunity cost of attending the review session is
A) the $10 he could have earned at his job.
B) the value of the session minus the $10 he could have earned at his job.
C) nothing, because the review session does not cost anything.
D) equal to the benefit he gets from the review session.
E) the one-hour review session.
Answer: A
Topic: Opportunity cost
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Analytic skills
12) Suppose that, instead of taking this test, you could either have worked and earned income or partied and had a pleasurable time. Your opportunity cost of taking the test is the
A) forgone work.
B) forgone party.
C) forgone working and partying.
D) forgone working or partying, depending on which was your next best choice.
E) test because you are taking it.
Answer: D
Topic: Opportunity cost
Skill: Level 2: Using definitions
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
13) The benefit from a good or service that you purchase is measured by
A) the dollar amount that is paid for the good or service.
B) the dollar amount you can get by selling the good or service.
C) what you are willing to give up to obtain the good or service.
D) how strong the incentives were that lead to buying the good or service.
E) None of the above answers is correct because there is no way to measure the benefit you receive from purchasing a good or service.
Answer: C
Topic: Benefit
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
14) Suppose you take a trip during spring break. To determine the benefit of taking the trip, you
A) calculate the opportunity cost of the trip.
B) measure what you are willing to give up to take the trip.
C) determine the sunk cost of taking the trip.
D) calculate the value of the next best alternative foregone.
E) must measure what the trip is worth to you and then subtract the cost of the trip.
Answer: B
Topic: Benefit
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
15) The cost of a one-unit increase in an activity is called the
A) opportunity benefit.
B) rational cost.
C) marginal cost.
D) marginal benefit.
E) margin.
Answer: C
Topic: Marginal cost
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking
16) The opportunity cost of a one-unit increase in an activity
A) is greater than the marginal benefit.
B) is called rational cost.
C) decreases as you do more of it.
D) is called marginal cost.
E) is measured by what the person is willing to give up to get one more unit of the activity.
Answer: D
Topic: Marginal cost
Skill: Level 1: Definition
Section: Checkpoint 1.2
Status: Old
AACSB: Reflective thinking