LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making
that determine how an economy generally works.
TOPICS: Economic thinking
Tradeoffs
KEYWORDS: BLOOM'S: Comprehension
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CUSTOM ID: 010.01 - SAE - MANK08
Scenario 1-3
It costs a company $35,000 to produce 700 graphing calculators. The company’s cost will be $35,070 if it produces an
additional graphing calculator. The company is currently producing 700 graphing calculators.
11. Refer to Scenario 1-3. What is the company’s average cost?
ANSWER: $50
DIFFICULTY: Challenging
LEARNING OBJECTIVES: ECON.MANK.001 - Analyze a firm's costs of production.
TOPICS: Economic thinking
KEYWORDS: BLOOM'S: Analysis
CUSTOM ID: 011.01 - SAE - MANK08
12. Refer to Scenario 1-3. What is the company’s marginal cost?
ANSWER: $70
DIFFICULTY: Challenging
LEARNING OBJECTIVES: ECON.MANK.001 - Analyze a firm's costs of production.
TOPICS: Economic thinking
KEYWORDS: BLOOM'S: Analysis
CUSTOM ID: 012.01 - SAE - MANK08
13. Refer to Scenario 1-3. A customer is willing to pay $60 for the 701 th calculator. Should the company produce and
sell it? Explain.
ANSWER: No, because the marginal cost ($70) is less than the marginal benefit ($60).
DIFFICULTY: Challenging
LEARNING OBJECTIVES: ECON.MANK.051 - Describe what it means to think at the margin.
TOPICS: Economic thinking
KEYWORDS: BLOOM'S: Analysis
CUSTOM ID: 013.01 - SAE - MANK08
14. Refer to Scenario 1-3. What is the minimum price the company will charge for the 701 th calculator?
ANSWER: $70
DIFFICULTY: Challenging
LEARNING OBJECTIVES: ECON.MANK.051 - Describe what it means to think at the margin.
TOPICS: Economic thinking
KEYWORDS: BLOOM'S: Analysis
CUSTOM ID: 014.01 - SAE - MANK08
Scenario 1-4 You have the afternoon free. You have a choice between going to the movies with a friend or studying
economics for three hours. If you go to the movies, you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose
to study economics for three hours, you will raise your exam grade by 15 points.
15. Refer to Scenario 1-4. What is your opportunity cost of going to the movies?
ANSWER: $16.75 and 15 points on your exam grade
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.302 - Identify the opportunity cost of an action.
TOPICS: Economic thinking
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Opportunity cost
KEYWORDS: BLOOM'S: Application
CUSTOM ID: 015.01 - SAE - MANK08
16. Refer to Scenario 1-4. What is your opportunity cost of studying economics?
ANSWER: The enjoyment you would have received from going to the movies with your friend.
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.302 - Identify the opportunity cost of an action.
TOPICS: Economic thinking
Opportunity cost
KEYWORDS: BLOOM'S: Application
CUSTOM ID: 016.01 - SAE - MANK08
17. What is another word for “marginal”?
ANSWER: incremental; additional
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.051 - Describe what it means to think at the margin.
KEYWORDS: BLOOM'S: Knowledge
CUSTOM ID: 017.01 - SAE - MANK08
18. The term ______ refers to a small incremental adjustment to an existing plan of action.
ANSWER: Marginal change
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.051 - Describe what it means to think at the margin.
KEYWORDS: BLOOM'S: Knowledge
CUSTOM ID: 018.01 - SAE - MANK08
Scenario 1-5
Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you
go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour.
19. Refer to Scenario 1-5. What is your opportunity cost of going to the movies?
ANSWER: $48
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.302 - Identify the opportunity cost of an action.
TOPICS: Economic thinking
Opportunity cost
KEYWORDS: BLOOM'S: Application
CUSTOM ID: 019.01 - SAE - MANK08
20. Refer to Scenario 1-5. What is your opportunity cost of working?
ANSWER: The enjoyment you would have received from going to the movies with your friend.
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.302 - Identify the opportunity cost of an action.
TOPICS: Economic thinking
Opportunity cost
KEYWORDS: BLOOM'S: Application
CUSTOM ID: 020.01 - SAE - MANK08
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Scenario 1-6
It costs a company $30,000 to produce 600 heart rate monitors. The company’s cost will be $30,070 if it produces an