additional heart rate monitor. The company is currently producing 600 heart rate monitors.
21. Refer to Scenario 1-6. 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: 021.01 - SAE - MANK08
22. Refer to Scenario 1-6. 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: 022.01 - SAE - MANK08
23. Refer to Scenario 1-6. A customer is willing to pay $60 for the 601 st heart rate monitor. Should the company produce
and sell it? Explain.
ANSWER: No, because the marginal cost ($70) exceeds 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: 023.01 - SAE - MANK08
24. Refer to Scenario 1-6. What is the minimum price that would induce this company to produce the 601 st heart rate
monitor?
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: 024.01 - SAE - MANK08
25. Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000
for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?
ANSWER: $38,000
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.302 - Identify the opportunity cost of an action.
TOPICS: Economic thinking
Opportunity cost
KEYWORDS: BLOOM'S: Application
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CUSTOM ID: 025.01 - SAE - MANK08
26. Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual
school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-
year graduate program?
ANSWER: $108,000
DIFFICULTY: Challenging
LEARNING OBJECTIVES: ECON.MANK.302 - Identify the opportunity cost of an action.
TOPICS: Economic thinking
Opportunity cost
KEYWORDS: BLOOM'S: Analysis
CUSTOM ID: 026.01 - SAE - MANK08
27. What does the term “marginal change” mean?
ANSWER: A small incremental adjustment to a plan of action
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.051 - Describe what it means to think at the margin.
KEYWORDS: BLOOM'S: Knowledge
CUSTOM ID: 027.01 - SAE - MANK08
28. Rational people make decisions “at the margin” by comparing ______.
ANSWER: marginal costs and marginal benefits
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.051 - Describe what it means to think at the margin.
KEYWORDS: BLOOM'S: Knowledge
CUSTOM ID: 028.01 - SAE - MANK08
29. In a centrally-planned economy, economic activity is guided by ______.
ANSWER: the government
DIFFICULTY: Challenging
LEARNING OBJECTIVES: ECON.MANK.218 - Given a scenario, identify the distribution system being used.
TOPICS: Economic thinking
KEYWORDS: BLOOM'S: Analysis
CUSTOM ID: 029.01 - SAE - MANK08
30. Explain how trade with other countries is beneficial.
ANSWER: Trade allows countries to specialize in what they do best, which increases total output.
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.011 - Apply basic principles about the international flow of goods
and capital.
TOPICS: International trade
KEYWORDS: BLOOM'S: Application
CUSTOM ID: 030.01 - SAE - MANK08
31. What are the two basic types of economies?
ANSWER: Centrally planned economies and market economies
DIFFICULTY: Easy
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LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making
that determine how an economy generally works.
KEYWORDS: BLOOM'S: Application
CUSTOM ID: 031.01 - SAE - MANK08
32. What is the main difference between a centrally planned economy and a market economy?
ANSWER: In a market economy, decisions are guided by prices and individual self-interest. In a
centrally planned economy, economic activity is guided by the government.
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.012 - Apply basic, economic principles of individual decision making
that determine how an economy generally works.
KEYWORDS: BLOOM'S: Application