Sec 1.1 MC How People Make Decisions

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1. Theadage,"Thereisnosuchthingasafreelunch,"means a. evenpeopleonwelfarehavetopayforfood. b. thecostoflivingisalwaysincreasing. c. peoplefacetradeoffs. d. allcostsareincludedinthepriceofaproduct.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  001.01.1-MC-MANK082. Theadage,"Thereisnosuchthingasafreelunch,"isusedtoillustratetheprinciplethat a. goodsarescarce. b. peoplefacetradeoffs. c. incomemustbeearned. d. householdsfacemanydecisions.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  002.01.1-MC-MANK083. Thephrase“nosuchthingasafreelunch”means a. peoplemustfacetradeoffs. b. rationalpeoplethinkatthemargin. c. peoplerespondtoincentives. d. tradecanmakeeveryonebetteroff.ANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  003.01.1-MC-MANK084. Whichofthefollowingstatementsbestrepresentstheprinciplerepresentedbytheadage,"Thereisnosuchthingasafreelunch"? a. Michellecanattendtheconcertonlyifshetakeshersisterwithher. b. Michaelishungryandhomeless. c. Andreamustrepairthetireonherbikebeforeshecanrideittoclass.CopyrightCengageLearning.PoweredbyCognero.Page 45  d. DanimustdecidebetweengoingtoFloridaorBrazilforspringbreak.ANSWER:  dDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  004.01.1-MC-MANK085. Whichofthefollowingexamplesdoesnotillustratetheprinciplerepresentedbytheadage,"Thereisnosuchthingasafreelunch"? a. Melissaneedstopayherrentandherelectricbill. b. Kevinmustchoosebetweenbuyinganewflatscreentelevisionandbuyinghistextbooksforthissemester. c. Robertmustdecidebetweenstudyingforhispsychologyexamandworkingathispart-timejob. d. Lisacanspendhermoneyonanewsmartphoneoronaweekendtrip.ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  005.01.1-MC-MANK086. Theprinciplethat"peoplefacetradeoffs"appliesto a. individuals. b. families. c. societies. d. Alloftheabovearecorrect.ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  006.01.1-MC-MANK087. Candiceisplanningheractivitiesforahotsummerday.Shewouldliketogotothelocalswimmingpoolandseethelatestblockbustermovie,butbecauseshecanonlygetticketstothemovieforthesametimethatthepoolisopenshecanonlychooseoneactivity.Thisillustratesthebasicprinciplethat a. peoplerespondtoincentives. b. rationalpeoplethinkatthemargin. c. peoplefacetradeoffs. d. improvementsinefficiencysometimescomeattheexpenseofequality.ANSWER:  cCopyrightCengageLearning.PoweredbyCognero.Page 45 DIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  007.01.1-MC-MANK088. BillieJeanhas$120tospendandwantstobuyeitheranewamplifierforherguitaroranewmp3playertolistentomusicwhileworkingout.Boththeamplifierandthemp3playercost$120,soshecanonlybuyone.Thisillustratesthebasicconceptthat a. tradecanmakeeveryonebetteroff. b. peoplefacetrade-offs. c. rationalpeoplethinkatthemargin. d. decisionsmadeatthemarginarenotparticularlyimportant.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  008.01.1-MC-MANK089. Johnisanathlete.Hehas$120tospendandwantstobuyeitheraheartratemonitorornewrunningshoes.Boththeheartratemonitorandrunningshoescost$120,sohecanonlybuyone.Thisillustratestheprinciplethat a. tradecanmakeeveryonebetteroff. b. peoplefacetrade-offs. c. rationalpeoplethinkatthemargin. d. peoplerespondtoincentives.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  009.01.1-MC-MANK0810. Lawrenceisaphotographer.Hehas$230tospendandwantstobuyeitheraflashforhiscameraoranewtripod.Boththeflashandtripodcost$230,sohecanonlybuyone.Thisillustratestheprinciplethat a. tradecanmakeeveryonebetteroff. b. peoplefacetrade-offs. c. rationalpeoplethinkatthemargin. d. peoplerespondtoincentives.ANSWER:  bDIFFICULTY:  EasyCopyrightCengageLearning.PoweredbyCognero.Page 45 LEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  010.01.1-MC-MANK0811. Gunsandbutterareusedtorepresenttheclassicsocietaltradeoffbetweenspendingon a. durableandnondurablegoods. b. importsandexports. c. nationaldefenseandconsumergoods. d. lawenforcementandagriculture.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  011.01.1-MC-MANK0812. Atradeoffexistsbetweenacleanenvironmentandahigherlevelofincomeinthat a. studiesshowthatindividualswithhigherlevelsofincomepollutelessthanlow-incomeindividuals. b. effortstoreducepollutiontypicallyarenotcompletelysuccessful. c. lawsthatreducepollutionraisecostsofproductionandreduceincomes. d. employingindividualstocleanuppollutioncausesincreasesinemploymentandincome.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  012.01.1-MC-MANK0813. Whilepollutionregulationsyieldthebenefitofacleanerenvironmentandtheimprovedhealththatcomeswithit,theregulationscomeatthecostofreducingtheincomesoftheregulatedfirms’owners,workers,andcustomers.Thisstatementillustratestheprinciplethat a. tradecanmakeeveryonebetteroff. b. rationalpeoplethinkatthemargin. c. peoplefacetradeoffs. d. peoplerespondtoincentives.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 TradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  013.01.1-MC-MANK0814. Whensocietyrequiresthatfirmsreducepollution,thereis a. atradeoffbecauseofreducedincomestothefirms'ownersandworkers. b. atradeoffonlyifsomefirmsareforcedtoclose. c. notradeoff,sincethecostofreducingpollutionfallsonlyonthefirmsaffectedbytherequirements. d. notradeoff,sinceeveryonebenefitsfromreducedpollution.ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  014.01.1-MC-MANK0815. Economistsusethewordequalitytodescribeasituationinwhich a. eachmemberofsocietyhasthesameincome. b. eachmemberofsocietyhasaccesstoabundantquantitiesofgoodsandservices,regardlessofhisorherincome. c. societyisgettingthemaximumbenefitsfromitsscarceresources. d. society'sresourcesareusedefficiently.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  015.01.1-MC-MANK0816. Efficiencymeansthat a. societyisconservingresourcesinordertosavethemforthefuture. b. society'sgoodsandservicesaredistributedequallyamongsociety'smembers. c. society'sgoodsandservicesaredistributedfairly,thoughnotnecessarilyequally,amongsociety'smembers. d. societyisgettingthemaximumbenefitsfromitsscarceresources.ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  016.01.1-MC-MANK08CopyrightCengageLearning.PoweredbyCognero.Page 45 17. Thepropertyofsocietygettingthemostitcanfromitsscarceresourcesiscalled a. efficiency. b. equality. c. externality. d. productivity.ANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  017.01.1-MC-MANK0818. Efficiency a. andequalitybothrefertohowmuchasocietycanproducewithitsresources. b. andequalitybothrefertohowfairlythebenefitsfromusingresourcesaredistributedbetweenmembersofasociety. c. referstohowmuchasocietycanproducewithitsresources.Equalityreferstohowevenlythebenefitsfromusingresourcesaredistributedamongmembersofsociety. d. referstohowevenlythebenefitsfromusingresourcesaredistributedbetweenmembersofsociety.EqualityreferstohowmuchasocietycanproducewithitsresourcesANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  018.01.1-MC-MANK0819. Thetermsequalityandefficiencyaresimilarinthattheybothrefertobenefitstosociety.Howevertheyaredifferentinthat a. equalityreferstouniformdistributionofthosebenefitsandefficiencyreferstomaximizingbenefitsfromscarceresources. b. equalityreferstomaximizingbenefitsfromscarceresourcesandefficiencyreferstouniformdistributionofthosebenefits. c. equalityreferstoeveryonefacingidenticaltradeoffsandefficiencyreferstotheopportunitycostofthebenefits. d. equalityreferstotheopportunitycostofthebenefitsandefficiencyreferstoeveryonefacingidenticaltradeoffs.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:KnowledgeCopyrightCengageLearning.PoweredbyCognero.Page 45 CUSTOM ID:  019.01.1-MC-MANK0820. Whichofthefollowingphrasesbestcapturesthenotionofefficiency? a. absolutefairness b. equaldistribution c. minimumwaste d. equitableoutcomeANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  020.01.1-MC-MANK0821. Whichofthefollowingwordsandphrasesbestcapturesthenotionofequality? a. minimumwaste b. maximumbenefit c. sameness d. efficiencyANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  021.01.1-MC-MANK0822. Whensocietygetsthemostitcanfromitsscarceresources,thentheoutcomeiscalled a. equitable. b. efficient. c. normal. d. efficacious.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  022.01.1-MC-MANK0823. Atypicalsocietystrivestogetthemostitcanfromitsscarceresources.Atthesametime,thesocietyattemptstodistributethebenefitsofthoseresourcestothemembersofthesocietyinafairmanner.Inotherwords,thesocietyfacesatradeoffbetweenCopyrightCengageLearning.PoweredbyCognero.Page 45  a. gunsandbutter. b. efficiencyandequality. c. inflationandunemployment. d. workandleisure.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  023.01.1-MC-MANK0824. Whenthegovernmentredistributesincomefromthewealthytothepoor, a. efficiencyisimproved,butequalityisnot. b. equalityisimproved,butefficiencyisnot. c. bothefficiencyandequalityareimproved. d. neitherefficiencynorequalityareimproved.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  024.01.1-MC-MANK0825. Whichofthefollowingistrue? a. Efficiencyreferstothesizeoftheeconomicpie;equalityreferstohowthepieisdivided. b. Governmentpoliciesusuallyimproveuponbothequalityandefficiency. c. Aslongastheeconomicpiecontinuallygetslarger,noonewillhavetogohungry. d. Efficiencyandequalitycanbothbeachievediftheeconomicpieiscutintoequalpieces.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  025.01.1-MC-MANK0826. Asaresultofasuccessfulattemptbygovernmenttocuttheeconomicpieintomoreequalslices, a. thepiegetslarger,andtherewillbemorepieoverall. b. thepiegetssmaller,andtherewillbelesspieoverall. c. itincreasestherewardforworkinghard,resultinginpeopleproducingmoregoodsandservices. d. thosewhoearnmoreincomepaylessintaxes.ANSWER:  bCopyrightCengageLearning.PoweredbyCognero.Page 45 DIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  026.01.1-MC-MANK0827. Whenthegovernmentredistributesincomefromthewealthytothepoor, a. efficiencyisimproved,butequalityisnot. b. bothwealthypeopleandpoorpeoplebenefitdirectly. c. peopleworklessandproducefewergoodsandservices. d. thegovernmentcollectsmorerevenueintotal.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  027.01.1-MC-MANK0828. Whenthegovernmentattemptstoimproveequalityinaneconomytheresultisoften a. anincreaseinoveralloutputintheeconomy. b. additionalgovernmentrevenuesinceoverallincomewillincrease. c. areductioninequality. d. areductioninefficiency.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  028.01.1-MC-MANK0829. Whenthegovernmentimplementsprogramssuchasprogressiveincometaxrates,whichofthefollowingislikelytooccur? a. equalityisincreasedandefficiencyisincreased. b. equalityisincreasedandefficiencyisdecreased. c. equalityisdecreasedandefficiencyisincreased. d. equalityisdecreasedandefficiencyisdecreased.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 EqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  029.01.1-MC-MANK0830. Alikelyeffectofgovernmentpoliciesthatredistributeincomeandwealthfromthewealthytothepooristhatthosepolicies a. enhanceequality. b. reduceefficiency. c. reducetherewardforworkinghard. d. Alloftheabovearecorrect.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  030.01.1-MC-MANK0831. Alikelyeffectofgovernmentpoliciesthatredistributeincomeandwealthfromthewealthytothepooristhatthosepolicies a. enhanceequality. b. enhanceefficiency. c. increasetherewardforworkinghard. d. Alloftheabovearecorrect.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  031.01.1-MC-MANK0832. Governmentpoliciesdesignedtoequalizethedistributionofeconomicwell-beinginclude(i)thewelfaresystem(ii)unemploymentinsurance(iii)progressiveincometax a. (i)only b. (ii)only c. (i)and(ii)only d. (i),(ii),and(iii)ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityCopyrightCengageLearning.PoweredbyCognero.Page 45 KEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  032.01.1-MC-MANK0833. Governmentpoliciesresultinginreducedefficiencyinclude(i)thewelfaresystem(ii)unemploymentinsurance(iii)progressiveincometax a. (i)only b. (ii)only c. (i)and(ii)only d. (i),(ii),and(iii)ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEfficiencyKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  033.01.1-MC-MANK0834. Whengovernmentpoliciesareenacted, a. equalitycanusuallybeenhancedwithoutanefficiencyloss,butefficiencycanneverbeenhancedwithoutareductioninequality. b. efficiencycanusuallybeenhancedwithoutareductioninequality,butequalitycanneverbeenhancedwithoutanefficiencyloss. c. itisalwaysthecasethateitherefficiencyandequalityarebothenhanced,orefficiencyandequalityarebothdiminished. d. Noneoftheabovearecorrect.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  034.01.1-MC-MANK0835. SenatorBrownwantstoincreasetaxesonpeoplewithhighincomesandusethemoneytohelpthepoor.SenatorJohnsonarguesthatsuchataxwilldiscouragesuccessfulpeoplefromworkingandwillthereforemakesocietyworseoff.Aneconomistwouldsaythat a. weshouldagreewithSenatorBrown. b. weshouldagreewithSenatorJohnson. c. agooddecisionrequiresthatwerecognizebothviewpoints. d. therearenotradeoffsbetweenequityandefficiency.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.024-Classifythedifferentfunctionsaneconomistmayserve.TOPICS:  EconomicthinkingKEYWORDS:  BLOOM'S:ApplicationCopyrightCengageLearning.PoweredbyCognero.Page 45 CUSTOM ID:  035.01.1-MC-MANK0836. Acertainstatelegislatureisconsideringanincreaseinthestategasolinetax.RepresentativeCampbellarguesthatanincreaseinthegasolinetaxwouldharmlow-incomedriversdisproportionately.RepresentativeRichardsrespondsbysayingthatlow-incomedriversownsmallercarsthatuselessgasoline,andthatlow-incomedriversthereforewouldnotbeharmeddisproportionately. a. RepresentativeCampbell’sargumentisbasedprimarilyonefficiency,whileRepresentativeRichards’argumentisbasedprimarilyonequality. b. RepresentativeCampbell’sargumentisbasedprimarilyonequality,whileRepresentativeRichards’argumentisbasedprimarilyonefficiency. c. Bothrepresentatives’argumentsarebasedprimarilyonefficiency. d. Bothrepresentatives’argumentsarebasedprimarilyonequality.ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  036.01.1-MC-MANK0837. SenatorJacksonarguesthatreplacingthefederalincometaxwithanationalsalestaxwouldincreasethelevelofoutput.SenatorFeldmanobjectsthatthispolicywouldbenefittherichattheexpenseofthepoor. a. Bothsenators’argumentsareprimarilyaboutequality. b. Bothsenators’argumentsareprimarilyaboutefficiency. c. SenatorJackson’sargumentisprimarilyaboutequality,whileSenatorFeldman’sargumentisprimarilyaboutefficiency. d. SenatorJackson’sargumentisprimarilyaboutefficiency,whileSenatorFeldman’sargumentisprimarilyaboutequality.ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  037.01.1-MC-MANK0838. Supposethegovernmenttaxesthewealthyatahigherratethanittaxesthepoorandthendevelopsprogramstoredistributethetaxrevenuefromthewealthytothepoor.Thisredistributionofwealth a. ismoreefficientandmoreequalforsociety. b. ismoreefficientbutlessequalforsociety. c. ismoreequalbutlessefficientforsociety. d. islessequalandlessefficientforsociety.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 EqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  038.01.1-MC-MANK0839. Thegovernmenthasjustpassedalawrequiringthatallresidentsearnthesameannualincomeregardlessofworkeffort.Thislawislikelyto a. increaseefficiencyandincreaseequality. b. increaseefficiencybutdecreaseequality. c. decreaseefficiencybutincreaseequality. d. decreaseefficiencyanddecreaseequality.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingEqualityKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  039.01.1-MC-MANK0840. Theopportunitycostofanitemis a. thenumberofhoursneededtoearnmoneytobuytheitem. b. whatyougiveuptogetthatitem. c. usuallylessthanthedollarvalueoftheitem. d. thedollarvalueoftheitem.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  040.01.1-MC-MANK0841. Ineconomics,thecostofsomethingis a. thedollaramountofobtainingit. b. alwaysmeasuredinunitsoftimegivenuptogetit. c. whatyougiveuptogetit. d. oftenimpossibletoquantify,eveninprinciple.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.15.2.1a-LO:Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  041.01.1-MC-MANK0842. Whatyougiveuptoobtainanitemiscalledyour a. opportunitycost.CopyrightCengageLearning.PoweredbyCognero.Page 45  b. explicitcost. c. monetarycost. d. directcost.ANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  042.01.1-MC-MANK0843. Whichofthefollowingiscorrectconcerningopportunitycost? a. Excepttotheextentthatyoupaymoreforthem,opportunitycostsshouldnotincludethecostofthingsyouwouldhavepurchasedanyway. b. Tocomputeopportunitycosts,youshouldsubtractbenefitsfromcosts. c. Opportunitycostsandtheideaoftrade-offsarenotcloselyrelated. d. Rationalpeopleshouldcomparevariousoptionswithoutconsideringopportunitycosts.ANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  043.01.1-MC-MANK0844. High-schoolathleteswhoskipcollegetobecomeprofessionalathletes a. obviouslydonotunderstandthevalueofacollegeeducation. b. usuallydosobecausetheycannotgetintocollege. c. understandthattheopportunitycostofattendingcollegeisveryhigh. d. arenotmakingarationaldecisionsincethemarginalbenefitsofcollegeoutweighthemarginalcostsofcollegeforhigh-schoolathletes.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  044.01.1-MC-MANK0845. Supposethatyouhavereceived$300asabirthdaygift.Youcanspendittodayoryoucanputthemoneyinabankaccountforayearandearn5percentinterest.Theopportunitycostofspendingthemoneytoday,intermsofwhatyoucouldhaveafteroneyear,is a. $0. b. $15. c. $305. d. $315.ANSWER:  dCopyrightCengageLearning.PoweredbyCognero.Page 45 DIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  045.01.1-MC-MANK0846. Whencomputingtheopportunitycostofattendingabasketballgameyoushouldinclude a. thepriceyoupayfortheticketandthevalueofyourtime. b. thepriceyoupayfortheticket,butnotthevalueofyourtime. c. thevalueofyourtime,butnotthepriceyoupayfortheticket. d. neitherthepriceoftheticketnorthevalueofyourtime.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  046.01.1-MC-MANK0847. Melodydecidestospendthreehoursworkingovertimeratherthangoingtotheparkwithherfriends.Sheearns$20perhourforovertimework.Heropportunitycostofworkingis a. the$60sheearnsworking. b. the$60minustheenjoymentshewouldhavereceivedfromgoingtothepark. c. theenjoymentshewouldhavereceivedhadshegonetothepark. d. nothing,sinceshewouldhavereceivedlessthan$60worthofenjoymentfromgoingtothepark.ANSWER:  cDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  047.01.1-MC-MANK0848. Ramonadecidestospendtwohourstakinganapratherthanattendingherclasses.Heropportunitycostofnappingis a. thevalueoftheknowledgeshewouldhavereceivedhadsheattendedclass. b. the$24shecouldhaveearnedifshehadworkedatherjobforthosetwohours. c. thevalueofhernapminusthevalueofattendingclass. d. nothing,sinceshevaluedsleepmorethanattendanceatclass.ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  048.01.1-MC-MANK08CopyrightCengageLearning.PoweredbyCognero.Page 45 49. HamidspendsanhourstudyinginsteadofwatchingTVwithhisfriends.Theopportunitycosttohimofstudyingis a. theimprovementinhisgradesfromstudyingforthehour. b. theimprovementinhisgradesfromstudyingminustheenjoymentofwatchingTV. c. theenjoymenthewouldhavereceivedifhehadwatchedTVwithhisfriends. d. zero.SinceHamidchosetostudyratherthantowatchTV,thevalueofstudyingmusthavebeengreatertohimthanthevalueofwatchingTV.ANSWER:  cDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  049.01.1-MC-MANK0850. Formoststudents,thelargestsinglecostofacollegeeducationis a. thewagesgivenuptoattendschool. b. tuition,fees,andbooks. c. roomandboard. d. transportation,parking,andentertainment.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  050.01.1-MC-MANK0851. Formoststudents,theearningstheygiveuptoattendcollegeare a. aminorcostwhencomparedtothecostsoftuition,roomandboard,andthelike. b. thesinglelargestcostoftheireducation. c. aboutequaltothecostsofroomandboardatcollege. d. notconsideredtruecostsbyaneconomist.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  051.01.1-MC-MANK0852. Theopportunitycostofgoingtocollegeis a. thetotalspentonfood,clothing,books,transportation,tuition,lodging,andotherexpenses. b. thevalueofthebestopportunityastudentgivesuptoattendcollege. c. zeroforstudentswhoarefortunateenoughtohavealloftheircollegeexpensespaidbysomeoneelse. d. zero,sinceacollegeeducationwillallowastudenttoearnalargerincomeaftergraduation.ANSWER:  bCopyrightCengageLearning.PoweredbyCognero.Page 45 DIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  052.01.1-MC-MANK0853. Whichofthefollowingisnotanexampleoftheopportunitycostofgoingtoschool? a. Themoneyastudentcouldhaveearnedbyworkingifhehadnotgonetocollege. b. Thenapastudentcouldhaveenjoyedifhehadnotattendedclass. c. Thepartyastudentcouldhaveenjoyedifhehadnotstayedintostudyforhisexam. d. Themoneyastudentspendsonrentforhisapartmentwhileattendingschool.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  053.01.1-MC-MANK0854. Foracollegestudentwhowishestocalculatethetruecostsofgoingtocollege,thecostsofroomandboard a. shouldbecountedinfull,regardlessofthecostsofeatingandsleepingelsewhere. b. shouldbecountedonlytotheextentthattheyaremoreexpensiveatcollegethanelsewhere. c. usuallyexceedtheopportunitycostofgoingtocollege. d. plusthecostoftuition,equalstheopportunitycostofgoingtocollege.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  054.01.1-MC-MANK0855. Whenyoucalculateyourtruecostsofgoingtocollege,whatportionofyourroom-and-boardexpensesshouldbeincluded? a. Yourfullroom-and-boardexpensesshouldalwaysbeincluded. b. Noneofyourroom-and-boardexpensesshouldeverbeincluded. c. Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedtheincomeyouearnwhileattendingcollege. d. Youshouldincludeonlytheamountbywhichyourroom-and-boardexpensesexceedtheexpensesforrentandfoodifyouwerenotincollege.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 OpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  055.01.1-MC-MANK0856. ConsiderFrank’sdecisiontogotocollege.Ifhegoestocollege,hewillspend$21,000ontuition,$11,000onroomandboard,and$1,800onbooks.Ifhedoesnotgotocollege,hewillearn$16,000workinginastoreandspend$7,200onroomandboard.Frank’scostofgoingtocollegeis a. $33,800. b. $42,600. c. $49,800. d. $57,000.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  056.01.1-MC-MANK0857. Supposeaftergraduatingfromcollegeyougetajobworkingatabankearning$30,000peryear.Aftertwoyearsofworkingatthebankearningthesamesalary,youhaveanopportunitytoenrollinaone-yeargraduateprogramthatwouldrequireyoutoquityourjobatthebank.Whichofthefollowingshouldnotbeincludedinacalculationofyouropportunitycost? a. thecostoftuitionandbookstoattendthegraduateprogram b. the$30,000salarythatyoucouldhaveearnedifyouretainedyourjobatthebank c. the$45,000salarythatyouwillbeabletoearnafterhavingcompletedyourgraduateprogram d. thevalueofinsurancecoverageandotheremployeebenefitsyouwouldhavereceivedifyouretainedyourjobatthebankANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  057.01.1-MC-MANK0858. Forwhichofthefollowingindividualswouldtheopportunitycostofgoingtocollegebehighest? a. apromisingyoungmathematicianwhowillcommandahighsalaryoncesheearnshercollegedegree b. astudentwithaveragegradeswhohasneverheldajob c. afamous,highly-paidactorwhowantstotaketimeawayfromshowbusinesstofinishcollegeandearnadegree d. astudentwhoisthebestplayeronhiscollegebasketballteam,butwholackstheskillsnecessarytoplayprofessionalbasketballANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 OpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  058.01.1-MC-MANK0859. ConsiderMandy’sdecisiontogotocollege.Ifshegoestocollege,shewillspend$20,000ontuition,$10,000onroomandboard,and$2,000onbooks.Ifshedoesnotgotocollege,shewillearn$18,000workinginastoreandspend$8,000onroomandboard.Mandy’scostofgoingtocollegeis a. $32,000. b. $42,000. c. $50,000. d. $58,000.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  059.01.1-MC-MANK0860. ConsiderNoah’sdecisiontogotocollege.Ifhegoestocollege,hewillspend$80,000ontuition,$15,000onroomandboard,and$4,000onbooks.Ifhedoesnotgotocollege,hewillearn$22,000workinginastoreandhewillspend$13,000onroomandboard.Noah’scostofgoingtocollegeis a. $99,000. b. $103,000. c. $108,000. d. $121,000.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  060.01.1-MC-MANK0861. ConsiderPaul’sdecisiontogotocollege.Ifhegoestocollege,hewillspend$90,000ontuition,$15,000onroomandboard,and$7,000onbooks.Ifhedoesnotgotocollege,hewillearn$22,000workingataconstructionjobandhewillspend$11,000onroomandboard.Paul’scostofgoingtocollegeis a. $96,000. b. $110,000. c. $114,000. d. $123,000.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 OpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  061.01.1-MC-MANK0862. IfFaithattendscollege,itwilltakeherfouryears,duringwhichtimeshewillearnnoincome.Shewillpay$50,000fortuition,$12,000forroomandboard,and$5,000forbooks.Ifshespendsthefouryearsworkingratherthanattendingcollege,shewillpay$18,000forroomandboard,paynointuition,andbuynobooks.Basedonthisinformation,Faith’seconomiccostofattendingcollegewouldbe$67,000if,overthefouryears,shecouldearn a. $12,000insteadofattendingcollege. b. $14,000insteadofattendingcollege. c. $16,000insteadofattendingcollege. d. $18,000insteadofattendingcollege.ANSWER:  dDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  062.01.1-MC-MANK0863. Maureen’scollegeraisesthecostofroomandboardpersemester.ThisincreaseraisesMaureen’sopportunitycostofattendingcollege a. eveniftheamountshewouldhavetopayforroomandboardifshedidn’tattendcollegerosebythesameamount.AnincreaseinopportunitycostreducesMaureen’sincentivetoattendcollege. b. eveniftheamountshewouldhavetopayforroomandboardifshedidn’tattendcollegerosebythesameamount.AnincreaseinopportunitycostincreasesMaureen’sincentivetoattendcollege. c. onlyiftheamountshewouldhavetopayforroomandboardifshedidn’tattendcollegerosebylessthantheincreaseintheamounthercollegecharges.AnincreaseinopportunitycostreducesMaureen’sincentivetoattendcollege. d. onlyiftheamountshewouldhavetopayforroomandboardifshedidn’tattendcollegerosebylessthantheincreaseintheamounthercollegecharges.AnincreaseinopportunitycostincreasesMaureen’sincentivetoattendcollege.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  063.01.1-MC-MANK0864. Whencalculatingthecostofcollege,whichofthefollowingshouldyouprobablynotinclude? a. Thecostoftuition b. Thecostofbooksrequiredforcollegeclasses c. Theincomeyouwouldhaveearnedhadyounotgonetocollege d. Thecostofrentforyouroff-campusapartment.ANSWER:  dDIFFICULTY:  ModerateCopyrightCengageLearning.PoweredbyCognero.Page 45 LEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  064.01.1-MC-MANK0865. Whencalculatingthecostofcollege,whichofthefollowingshouldyouprobablyinclude? a. Thecostofyourmealplanforthecafeteria. b. Thecostofbooksrequiredforcollegeclasses c. Theincomeyouearnatyourpart-timejob. d. Thecostoflivinginthedormitory.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  065.01.1-MC-MANK0866. Supposeyourcollegeinstitutesanewpolicyrequiringyoutopayforapermittoparkyourcarinacampusparkinglot. a. Thecostoftheparkingpermitisnotpartoftheopportunitycostofattendingcollegeifyouwouldnothavetopayforparkingotherwise. b. Thecostoftheparkingpermitispartoftheopportunitycostofattendingcollegeifyouwouldnothavetopayforparkingotherwise. c. Onlyhalfofthecostoftheparkingpermitispartoftheopportunitycostofattendingcollege. d. Thecostoftheparkingpermitisnotpartoftheopportunitycostofattendingcollegeunderanycircumstances.ANSWER:  bDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  066.01.1-MC-MANK0867. Youhavedriven800milesonavacationandthenyounoticethatyouareonly15milesfromanattractionyouhadn’tknownabout,butwouldreallyliketosee.Incomputingtheopportunitycostofvisitingthisattractionyouhadnotplannedtovisit,youshouldinclude a. boththecostofdrivingthefirst800milesandthenext15miles. b. thecostofdrivingthefirst800miles,butnotthecostofdrivingthenext15miles. c. thecostofdrivingthenext15miles,butnotthecostofdrivingthefirst800miles. d. neitherthecostofdrivingthefirst800milesnorthecostofdrivingthenext15miles.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.CopyrightCengageLearning.PoweredbyCognero.Page 45 TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  067.01.1-MC-MANK0868. Barb’sauntgaveher$100forherbirthdaywiththeconditionthatBarbbuyherselfsomething.Indecidinghowtospendthemoney,Barbnarrowsheroptionsdowntofourchoices:OptionA,OptionB,OptionC,andOptionD.Eachoptioncosts$100.FinallyshedecidesonOptionB.Theopportunitycostofthisdecisionis a. thevaluetoBarboftheoptionshewouldhavechosenhadOptionBnotbeenavailable. b. thevaluetoBarbofOptionsA,CandDcombined. c. theaverageofthevaluestoBarbofOptionsA,C,andD. d. $100.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  068.01.1-MC-MANK0869. College-ageathleteswhodropoutofcollegetoplayprofessionalsports a. arenotrationaldecisionmakers. b. arewellawarethattheiropportunitycostofattendingcollegeisveryhigh. c. areconcernedmoreaboutpresentcircumstancesthantheirfuture. d. underestimatethevalueofacollegeeducation.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  069.01.1-MC-MANK0870. Arationaldecisionmaker a. ignoresmarginalchangesandfocusesinsteadon“thebigpicture.” b. ignoresthelikelyeffectsofgovernmentpolicieswhenheorshemakeschoices. c. takesanactiononlyifthemarginalbenefitofthatactionexceedsthemarginalcostofthataction. d. takesanactiononlyifthecombinedbenefitsofthatactionandpreviousactionsexceedthecombinedcostsofthatactionandpreviousactions.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCopyrightCengageLearning.PoweredbyCognero.Page 45 CUSTOM ID:  070.01.1-MC-MANK0871. Inthecontextofdecisionmaking,theword“marginal”ismostcloselyassociatedwiththeword a. “unimportant.” b. “slow.” c. “edge.” d. “irrational.”ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  071.01.1-MC-MANK0872. Arationaldecisionmakertakesanactiononlyifthe a. marginalbenefitislessthanthemarginalcost. b. marginalbenefitisgreaterthanthemarginalcost. c. averagebenefitisgreaterthantheaveragecost. d. marginalbenefitisgreaterthanboththeaveragecostandthemarginalcost.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  072.01.1-MC-MANK0873. Arationaldecisionmakertakesanactionifandonlyif a. themarginalbenefitoftheactionexceedsthemarginalcostoftheaction. b. themarginalcostoftheactionexceedsthemarginalbenefitoftheaction. c. themarginalcostoftheactioniszero. d. theopportunitycostoftheactioniszero.ANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  073.01.1-MC-MANK0874. Rationalpeoplemakedecisionsatthemarginby a. followingmarginaltraditions. b. behavinginarandomfashion. c. thinkinginblack-and-whiteterms. d. comparingmarginalcostsandmarginalbenefits.CopyrightCengageLearning.PoweredbyCognero.Page 45 ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  074.01.1-MC-MANK0875. Rationalpeoplemakedecisions“atthemargin”bycomparing a. averagecostsandbenefits. b. totalcostsandbenefits. c. additionalcostsandbenefits. d. opportunitycostsandbenefits.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  075.01.1-MC-MANK0876. Makingrationaldecisions"atthemargin"meansthatpeople a. makethosedecisionsthatdonotimposeamarginalcost. b. evaluatehoweasilyadecisioncanbereversedifproblemsarise. c. comparethemarginalcostsandmarginalbenefitsofeachdecision. d. alwayscalculatethedollarcostsforeachdecision.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  076.01.1-MC-MANK0877. Amarginalchangeisa a. changethatinvolveslittle,ifanything,thatisimportant. b. large,significantadjustment. c. changefortheworse,andsoitisusuallyashort-termchange. d. small,incrementaladjustment.ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  077.01.1-MC-MANK08CopyrightCengageLearning.PoweredbyCognero.Page 45 78. Peoplearewillingtopaymoreforadiamondthanforabottleofwaterbecause a. themarginalcostofproducinganextradiamondfarexceedsthemarginalcostofproducinganextrabottleofwater. b. themarginalbenefitofanextradiamondfarexceedsthemarginalbenefitofanextrabottleofwater. c. producersofdiamondshaveamuchgreaterabilitytomanipulatediamondpricesthanproducersofwaterhavetomanipulatewaterprices. d. waterpricesareheldartificiallylowbygovernments,sincewaterisnecessaryforlife.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  078.01.1-MC-MANK0879. Itcostsameat-processingcompany$50,000toproduce5,000poundsofsteak.Thecompany’scostwillbe$50,009ifitproducesanadditionalpoundofsteak.Ifthecompanyproduces5,001poundsofsteakthen a. itsaveragecostisgreaterthanitsmarginalcost. b. itsaveragecostanditsmarginalcostareequal. c. itsaveragecostislessthanitsmarginalcost. d. thereisinsufficientinformationtocomputeaverageandmarginalcosts.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  079.01.1-MC-MANK0880. ThemarginalbenefitKyragetsfromeatingasecondsandwichis a. thetotalbenefitKyragetsfromeatingtwosandwichesminusthetotalbenefitshegetsfromeatingonesandwich. b. thesameasthetotalbenefitshegetsfromeatingtwosandwiches. c. lessthanthemarginalcostofeatingthesecondsandwichsinceshechosetoeatthesecondsandwich. d. thetotalbenefitKyragetsfromeatingthreesandwichesminusthetotalbenefitshegetsfromeatingtwosandwiches.ANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  080.01.1-MC-MANK0881. ThemarginalbenefitSusiegetsfrompurchasingathirdpairofglovesis a. thesameasthetotalbenefitshegetsfrompurchasingthreepairsofgloves.CopyrightCengageLearning.PoweredbyCognero.Page 45  b. morethanthemarginalcostofpurchasingthethirdpairofgloves. c. thetotalbenefitshegetsfrompurchasingthreepairsofglovesminusthetotalbenefitshegetsfrompurchasingtwopairsofgloves. d. thetotalbenefitshegetsfrompurchasingfourpairsofglovesminusthetotalbenefitshegetsfrompurchasingthreepairsofgloves.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  081.01.1-MC-MANK0882. Arationaldecisionmakertakesanactionifandonlyif a. theaveragebenefitoftheactionexceedstheaveragecost. b. theaveragecostoftheactionexceedstheaveragebenefit. c. themarginalbenefitoftheactionexceedsthemarginalcost. d. themarginalcostoftheactionexceedsthemarginalbenefit.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  082.01.1-MC-MANK0883. Ashleyeatstwobananasduringaparticularday.Themarginalbenefitsheenjoysfromeatingthesecondbanana a. canbethoughtofasthetotalbenefitAshleyenjoysbyeatingtwobananasminusthetotalbenefitshewouldhaveenjoyedbyeatingjustthefirstbanana. b. determinesAshley’smarginalcostofthefirstandsecondbananas. c. doesnotdependonhowmanybananasAshleyhasalreadyeaten. d. cannotbedeterminedunlessweknowhowmuchshepaidforthebananas.ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  083.01.1-MC-MANK0884. Aftermuchconsideration,youhavechosenCancunoverFt.LauderdaleasyourSpringBreakdestinationthisyear.However,SpringBreakisstillmonthsaway,andyoumayreversethisdecision.Whichofthefollowingeventswouldpromptyoutoreversethisdecision? a. ThemarginalbenefitofgoingtoCancunincreases. b. ThemarginalcostofgoingtoCancundecreases. c. ThemarginalbenefitofgoingtoFt.Lauderdaledecreases.CopyrightCengageLearning.PoweredbyCognero.Page 45  d. ThemarginalcostofgoingtoFt.Lauderdaledecreases.ANSWER:  dDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  084.01.1-MC-MANK0885. Aftermuchconsideration,youhavechosenIrelandoverSpainforyourStudyAbroadprogramnextyear.However,thedeadlineforyourfinaldecisionisstillmonthsawayandyoumayreversethisdecision.Whichofthefollowingeventswouldpromptyoutoreversethisdecision? a. ThemarginalbenefitofgoingtoSpainincreases. b. ThemarginalcostofgoingtoSpainincreases. c. ThemarginalbenefitofgoingtoIrelandincreases. d. ThemarginalcostofgoingtoIrelanddecreases.ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  085.01.1-MC-MANK0886. Abarbercurrentlycutshairfor50clientsperweekandearnsaprofit.Heisconsideringexpandinghisoperationinordertoservemoreclients.Shouldheexpand? a. Yes,becausecuttinghairisprofitable. b. No,becausehemaynotbeabletosellmoreservices. c. Itdependsonthemarginalcostofservingmoreclientsandthemarginalrevenuehewillearnfromservingmoreclients. d. Itdependsontheaveragecostofservingmoreclientsandtheaveragerevenuehewillearnfromservingmoreclients.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  086.01.1-MC-MANK0887. TheGet-There-SafeBuscompanyincursanaveragecostof$45foreachpassengeritcarriesonitstripfromAtlantatoChattanooga.Inadvanceofaparticulartrip,fourseatsremainunsold.Thebuscompanycouldincreaseitsprofitonlyifit a. chargedanyticketpriceabove$0forthefourremainingseats. b. chargedatleast$11.25foreachofthefourremainingseats. c. chargedatleast$45foreachofthefourremainingseats. d. paidfourpeopletooccupythefourremainingseats.CopyrightCengageLearning.PoweredbyCognero.Page 45 ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  087.01.1-MC-MANK0888. Supposethecostofflyinga200-seatplaneforanairlineis$100,000andthereare10emptyseatsonaflight.Ifthemarginalcostofflyingapassengeris$200andastandbypassengeriswillingtopay$300,theairlineshould a. selltheticketbecausethemarginalbenefitexceedsthemarginalcost. b. selltheticketbecausethemarginalbenefitexceedstheaveragecost. c. notselltheticketbecausethemarginalbenefitislessthanthemarginalcost. d. notselltheticketbecausethemarginalbenefitislessthantheaveragecost.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  088.01.1-MC-MANK0889. Supposethecostofflyinga100-seatplaneforanairlineis$50,000andthereare10emptyseatsonaflight.Theaveragecostperseatis a. $50. b. $500. c. $50,000. d. Thiscannotbedeterminedfromtheinformationgiven.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  089.01.1-MC-MANK0890. Supposethecostofflyinga100-seatplaneforanairlineis$50,000andthereare10emptyseatsonaflight.Themarginalcostofflyingapassengeris a. $50. b. $500. c. $50,000. d. Thiscannotbedeterminedfromtheinformationgiven.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.CopyrightCengageLearning.PoweredbyCognero.Page 45 TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  090.01.1-MC-MANK0891. Supposethecostofflyinga200-seatplaneforanairlineis$100,000andthereare10emptyseatsonaflight.Theairlineshouldsellatickettoastandbypassengeronlyifthepassengeriswillingtopay a. morethan$200. b. morethan$300. c. morethan$500. d. Thiscannotbedeterminedfromtheinformationgiven.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  091.01.1-MC-MANK0892. Stephenisrestoringacarandhasalreadyspent$4,000ontherestoration.Heexpectstobeabletosellthecarfor$5800.Stephendiscoversthatheneedstodoanadditional$2,400ofworktomakethecarworth$5,800topotentialbuyers.Hecouldalsosellthecarnow,withoutcompletingtheadditionalwork,for$3,800.Whatshouldhedo? a. Heshouldsellthecarnowfor$3,800. b. Heshouldkeepthecarsinceitwouldn’tberationaltospend$6,400restoringacarandthensellitforonly$5,800. c. Heshouldcompletetheadditionalworkandsellthecarfor$5,800. d. Itdoesnotmatterwhichactionhetakessincetheoutcomewillbethesameeitherway.ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  092.01.1-MC-MANK0893. Billisrestoringacarandhasalreadyspent$4000ontherestoration.Heexpectstobeabletosellthecarfor$6200.Billdiscoversthatheneedstodoanadditional$2400ofworktomakethecarworth$6200topotentialbuyers.Hecouldalsosellthecarnow,withoutcompletingtheadditionalwork,for$3800.Whatshouldhedo? a. Heshouldsellthecarnowfor$3800. b. Heshouldkeepthecarsinceitwouldn’tberationaltospend$6400restoringacarandthensellitforonly$6200. c. Heshouldcompletetheadditionalworkandsellthecarfor$6200. d. ItdoesnotmatterifBillsellsthecarnoworcompletestheworkandthensellsitatthehigherpricebecausetheoutcomewillbethesameeitherway.ANSWER:  dDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingCopyrightCengageLearning.PoweredbyCognero.Page 45 thatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  093.01.1-MC-MANK0894. Coleisrefinishinganantiquechinacabinetandhasalreadyspent$180ontherestoration.Heexpectstobeabletosellthecabinetfor$360.Colediscoversthatheneedstodoanadditional$200worthofworktomakethecabinetworth$360topotentialbuyers.Hecouldalsosellthecabinetnow,withoutcompletingtheadditionalwork,for$100.WhatshouldColedo? a. Heshouldsellthecabinetnowfor$100. b. Heshouldkeepthecabinetsinceitwouldn’tberationaltospend$380restoringacabinetandthensellitforonly$360. c. Heshouldcompletetheadditionalworkandsellthecabinetfor$360. d. Itdoesnotmatterwhichactionhetakessincetheoutcomewillbethesameeitherway.ANSWER:  cDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  094.01.1-MC-MANK0895. Katieisplanningtosellherhouse,andsheisconsideringmakingtwoupgradestothehousebeforelistingitforsale.Replacingthecarpetingwillcosther$2,500andreplacingtheroofwillcosther$9,000.Katieexpectsthenewcarpetingtoincreasethevalueofherhouseby$3,000andthenewrooftoincreasethevalueofherhouseby$7,000. a. Sheshouldmakebothimprovementstoherhouse. b. Sheshouldreplacethecarpetingbutnotreplacetheroof. c. Sheshouldreplacetheroofbutnotreplacethecarpeting. d. Sheshouldnotmakeeitherimprovementtoherhouse.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  095.01.1-MC-MANK0896. Bridgetdrinksthreesodasduringaparticularday.Themarginalbenefitsheenjoysfromdrinkingthethirdsoda a. canbethoughtofasthetotalbenefitBridgetenjoysbydrinkingthreesodasminusthetotalbenefitshewouldhaveenjoyedbydrinkingjusttwosodas. b. determinesBridget’swillingnesstopayforthethirdsoda. c. islikelydifferentfromthemarginalbenefitprovidedtoBridgetbythesecondsoda. d. Alloftheabovearecorrect.ANSWER:  dDIFFICULTY:  ChallengingCopyrightCengageLearning.PoweredbyCognero.Page 45 LEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  096.01.1-MC-MANK0897. Aconstructioncompanyhasbuilt30housessofarthisyearatatotalcosttothecompanyof$7.5million.Ifthecompanybuildsa31sthouse,itstotalcostwillincreaseto$7.76million.Whichofthefollowingstatementsiscorrect? a. Forthefirst30houses,theaveragecostperhousewas$250,000. b. Themarginalcostofthe31sthouse,ifitisbuilt,willbe$260,000. c. Ifthecompanycanexperienceamarginalbenefitof$275,000bybuildingthe31sthouse,thenthecompanyshouldbuildit. d. Alloftheabovearecorrect.ANSWER:  dDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  097.01.1-MC-MANK0898. AcmeHomeBuilders,Inc.,hasbuilt24housessofarthisyearatatotalcosttothecompanyof$4.80million.Ifthecompanybuildsa25thhouse,itstotalcostwillincreaseto$5.05million.Whichofthefollowingstatementsiscorrect? a. Forthefirst24houses,theaveragecostperhousewas$205,000. b. Themarginalcostofthe25thhouse,ifitisbuilt,willequal$250,000. c. Ifthecompanycansellthe25thhouseforatleast$202,000,thenitshouldbuildit. d. Alloftheabovearecorrect.ANSWER:  bDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  098.01.1-MC-MANK0899. Itcostsafurniturecompany$8,750toproduce25tables.Thecompany’stotalcostwillbe$9,125ifitproducesa26thtable.Ifthecompanyproduces26tables,then a. itsaveragecostisgreaterthanitsmarginalcost. b. itsaveragecostanditsmarginalcostareequal. c. itsaveragecostislessthanitsmarginalcost. d. Thiscannotbedeterminedfromtheinformationgiven.ANSWER:  cDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.CopyrightCengageLearning.PoweredbyCognero.Page 45 TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  099.01.1-MC-MANK08100. Supposethecostofoperatinga100roomhotelforanightis$10,000andthereare5emptyroomsfortonight.Ifthemarginalcostofoperatingoneroomforonenightis$30andacustomeriswillingtopay$60forthenight,thehotelmanagershould a. renttheroombecausethemarginalbenefitexceedsthemarginalcost. b. renttheroombecausethemarginalbenefitexceedstheaveragecost. c. notrenttheroombecausethemarginalbenefitislessthanthemarginalcost. d. notrenttheroombecausethemarginalbenefitislessthantheaveragecost.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  100.01.1-MC-MANK08101. Supposethecostofoperatinga75roomhotelforanightis$6,000andthereare5emptyroomsfortonight.Themarginalcostperroompernight a. is$40. b. is$80. c. is$120. d. cannotbedeterminedfromtheinformationgiven.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  101.01.1-MC-MANK08102. Supposethecostofoperatinga75roomhotelforanightis$6,000andthereare5emptyroomsfortonight.Ifthemarginalcostofoperatingoneroomforonenightis$40,thehotelmanagershouldrentoneoftheemptyroomsonlyifacustomeriswillingtopay a. morethan$40,astheaveragebenefitwillexceedthemarginalcost. b. morethan$40,asthemarginalbenefitwillexceedthemarginalcost. c. morethan$80,astheaveragebenefitwillexceedthemarginalcost. d. morethan$80,asthemarginalbenefitwillexceedthemarginalcost.ANSWER:  bDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 KEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  102.01.1-MC-MANK08103. Itcostsacompany$35,000toproduce500graphingcalculators.Thecompany’scostwillbe$35,080ifitproducesanadditionalgraphingcalculator.Ifthecompanyproduces501graphingcalculatorsthen a. itsaveragecostisgreaterthanitsmarginalcost. b. itsaveragecostanditsmarginalcostareequal. c. itsaveragecostislessthanitsmarginalcost. d. Thiscannotbedeterminedfromtheinformationgiven.ANSWER:  cDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  103.01.1-MC-MANK08104. DeShawnhasspent$600purchasingandrepairinganoldfishingboat,whichheexpectstosellfor$900oncetherepairsarecomplete.DeShawndiscoversthat,inadditiontothe$600hehasalreadyspent,heneedstomakeanadditionalrepair,whichwillcostanother$400,inordertomaketheboatworth$900topotentialbuyers.Hecanselltheboatasitisnowfor$400.Whatshouldhedo? a. Heshouldselltheboatasitisnowfor$400. b. Heshouldkeeptheboatsinceitwouldnotberationaltospend$1,000onrepairsandthenselltheboatfor$900. c. Heshouldcompletetherepairsandselltheboatfor$900. d. Itdoesnotmatterwhichactionhetakes;theoutcomeisthesameeitherway.ANSWER:  cDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  104.01.1-MC-MANK08105. Betty’sBakerybakesfreshbreadeverymorning.Anybreadnotsoldbytheendofthedayisthrownaway.AloafofbreadcostsBetty$2.00toproduce,andshepricesloavesofbreadat$3.50perloaf.SupposeneartheendofonedayBettystillhas12loavesofbreadonhand.Whichofthefollowingiscorrect? a. Bettyshouldonlyselltheremainingbreadfor$3.50perloafsincethatistheregularprice. b. Bettyshouldonlyselltheremainingbreadfor$2.00perloaformoresincethatiswhatthebreadcoststomake. c. Bettyshouldbewillingtoselltheremainingbreadforanypriceabove$0perloafsinceshewillhavetothrowitawayifshedoesnotsellitforsomething. d. Bettyshouldjustthrowthebreadawayandchangethepriceofherbreadstartingtomorrowtomakesureshesellsallofherbreadeachday.ANSWER:  cDIFFICULTY:  ModerateCopyrightCengageLearning.PoweredbyCognero.Page 45 LEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  105.01.1-MC-MANK08106. Abagelshopsellsfreshbakedbagelsfrom5a.m.until7p.m.everyday.Theshopdoesnotsellday-oldbagels,soallunsoldbagelsarethrownawayat7p.m.eachday.Thecostofmakingandsellingadozenbagelsis$1.00;therearenocostsassociatedwiththrowingbagelsaway.Ifthemanagerhas8dozenbagelsleftat6:30p.m.onaparticularday,whichofthefollowingalternativesismostattractive? a. Lowerthepriceoftheremainingbagels,evenifthepricefallsbelow$1.00perdozen. b. Lowerthepriceoftheremainingbagels,butundernocircumstancesshouldthepricefallbelow$1.00perdozen. c. Throwthebagelsawayandproduce8fewerdozenbagelstomorrow. d. Startingtomorrow,lowerthepriceonallbagelssotheywillallbesoldearlierintheday.ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  106.01.1-MC-MANK08107. Rickbuysa1966Mustangfor$3,000,planningtorestoreandsellthecar.Hegoesontospend$9,000restoringthecar.Atthispointhecansellthecarfor$10,000.Asanalternative,hecanspendanadditional$3,000replacingtheengine.Withanewenginethecarwouldsellfor$13,000.Rickshould a. completetherepairsandsellthecarfor$13,000. b. sellthecarnowfor$10,000. c. nevertrysuchanexpensiveprojectagain. d. beindifferentbetween(i)sellingthecarnowand(ii)replacingtheengineandthensellingit.ANSWER:  dDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  107.01.1-MC-MANK08108. Yvettebuysandsellsrealestate.Twoweeksago,shepaid$300,000forahouseonPineStreet,intendingtospend$50,000onrepairsandthensellthehousefor$400,000.Lastweek,thecitygovernmentannouncedaplantobuildanewlandfillonPineStreetjustdownthestreetfromthehouseYvettepurchased.Asaresultofthecity’sannouncedplan,Yvetteisweighingtwoalternatives:Shecangoaheadwiththe$50,000inrepairsandthensellthehousefor$290,000,orshecanforgotherepairsandsellthehouseasitisfor$250,000.Sheshould a. keepthehouseandliveinit. b. goaheadwiththe$50,000inrepairsandsellthehousefor$290,000.CopyrightCengageLearning.PoweredbyCognero.Page 45  c. forgotherepairsandsellthehouseasitisfor$250,000. d. movethehousefromPineStreettoamoredesirablelocation,regardlessofthecostofdoingso.ANSWER:  cDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  108.01.1-MC-MANK08109. Youareconsideringstayingincollegeanothersemestersothatyoucancompleteamajorineconomics.Indecidingwhetherornottostayyoushould a. comparethetotalcostofyoureducationtothetotalbenefitsofyoureducation. b. comparethetotalcostofyoureducationtothebenefitsofstayingonemoresemester. c. comparethecostofstayingonemoresemestertothebenefitsofstayingonemoresemester. d. comparethetotalbenefitsofyoureducationtothecostofstayingonemoresemester.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  109.01.1-MC-MANK08110. Kyleisplanningtotakearoadtrip.Afterhemakeshisplans,hehastomakesomeunexpectedautorepairs.Also,heseesthepriceofgashasgoneup.WhichofthesetwoeventsshouldKyleconsiderindecidingifitisstillworthwhiletogoonthetrip? a. theunexpectedrepairsandtheincreaseinthepriceofgas b. theunexpectedincreaseforrepairs,butnottheincreaseinthepriceofgas c. theincreaseinthepriceofgas,butnottheunexpectedrepairs d. neithertheunexpectedincreaseinthepriceofgasnortheunexpectedrepairsANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  110.01.1-MC-MANK08111. YouhaveeatentwobowlsoficecreamatSundaeSchoolIceCreamstore.Youconsidereatingathird.Asarationalconsumeryoushouldmakeyourchoicebycomparing a. thebenefitsfromeatingallthreebowlsoficecreamtohowmuchthreebowlsoficecreamcosts. b. thebenefitsfromeatingallthreebowlsoficecreamtohowmuchonemorebowloficecreamcosts. c. thebenefitsfromeatingonemorebowloficecreamtohowmuchthreebowlsoficecreamcosts. d. thebenefitsfromeatingonemorebowloficecreamtohowmuchonemorebowloficecreamcosts.ANSWER:  dCopyrightCengageLearning.PoweredbyCognero.Page 45 DIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  111.01.1-MC-MANK08112. OliviawasacceptedbyNorthwesternandbyanotheruniversity.Sheistryingtodecidewheretogo.Whichofthefollowingshouldinfluenceherdecision? a. howmuchshespentapplyingtoNorthwestern,andthedifferencebetweenlivingexpensesatNorthwesternandtheotheruniversity b. howmuchshespentapplyingtoNorthwestern,butnotthedifferencebetweenlivingexpensesatNorthwesternandtheotheruniversity c. thedifferencebetweenlivingexpensesatNorthwesternandhersecondchoice,butnothowmuchshespentapplyingtoNorthwestern d. neitherhowmuchshespentapplyingtoNorthwesternnorthedifferencebetweenlivingexpensesatNorthwesternandhersecondchoiceANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  112.01.1-MC-MANK08113. Yougotothemovieplexwheremoviesordinarilycost$9.Youareintendingtoseeamovieforwhichyouhavea$3offcoupongoodforonlythatmovieatthattime.However,whenyougetthereyouseeafriendwhoasksifyouwouldratherseeanewrelease.Bothmoviesstartandendatthesametime.Ifyoudecidetoseethenewreleasewithyourfriend,whatisyouropportunitycost? a. theamountyouvaluethefirstmovie+$3 b. theamountyouvaluethefirstmovie+$9 c. $3 d. $9ANSWER:  aDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  113.01.1-MC-MANK08114. MaxandMaddychargepeopletoparkontheirlawnwhileattendinganearbycraftfair.Atthecurrentpriceof$10,sevenpeopleparkontheirlawn.Iftheyraisethepriceto$15,theyknowthatonlyfivepeoplewillwanttoparkontheirlawn.Whethertheyhavesevenorfivecarsparkedontheirlawndoesnotaffecttheircosts.Fromthisinformationitfollowsthat a. theyshouldleavethepriceat$10. b. itdoesnotmatteriftheycharge$10or$15. c. theywoulddobettercharging$15than$10.CopyrightCengageLearning.PoweredbyCognero.Page 45  d. theyshouldraisethepriceevenmore.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  114.01.1-MC-MANK08115. Yourprofessorlovesherwork,teachingeconomics.Shehasbeenofferedotherpositionsinthecorporateworldthatwouldincreaseherincomeby25percent,butshehasdecidedtocontinueworkingasaprofessor.Herdecisionwouldnotchangeunlessthemarginal a. costofteachingincreased. b. benefitofteachingincreased. c. costofacorporatejobincreased. d. benefitofacorporatejobdecreased.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  115.01.1-MC-MANK08116. Supposeyourmanagementprofessorhasbeenofferedacorporatejobwitha30percentpayincrease.Hehasdecidedtotakethejob.Forhim,themarginal a. costofleavingwasgreaterthanthemarginalbenefit. b. benefitofleavingwasgreaterthanthemarginalcost. c. benefitofteachingwasgreaterthanthemarginalcost. d. Alloftheabovearecorrect.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  EconomicthinkingMarginalthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  116.01.1-MC-MANK08117. Somethingthatinducesapersontoactiscalled a. atrade-off. b. apolicy. c. anincentive. d. anopportunitycost.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.CopyrightCengageLearning.PoweredbyCognero.Page 45 TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  117.01.1-MC-MANK08118. Economistsareparticularlyadeptatunderstandingthatpeoplerespondto a. laws. b. incentives. c. punishmentsmorethanrewards. d. rewardsmorethanpunishments.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  118.01.1-MC-MANK08119. Ataxongasolineencouragespeopletodrivesmaller,morefuel-efficientcars.Whichprincipleofeconomicsdoesthisillustrate? a. Peoplefacetradeoffs. b. Thecostofsomethingiswhatyougiveuptogetit. c. Rationalpeoplethinkatthemargin. d. Peoplerespondtoincentives.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.224-Givenascenario,identifywhichprincipleofeconomicinteractionbestdescribesit.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  119.01.1-MC-MANK08120. Peoplearelikelytorespondtoapolicychange a. onlyiftheythinkthepolicyisagoodone. b. onlyifthepolicychangechangesthecostsoftheirbehavior. c. onlyifthepolicychangechangesthebenefitsoftheirbehavior. d. ifthepolicychangeseitherthecostsorbenefitsoftheirbehavior.ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  120.01.1-MC-MANK08CopyrightCengageLearning.PoweredbyCognero.Page 45 121. SupposethestateofWyomingpassesalawthatincreasesthetaxoncigarettes.Asaresult,smokerswholiveinWyomingstartpurchasingtheircigarettesinsurroundingstates.Whichofthefollowingprinciplesdoesthisbestillustrate? a. Peoplerespondtoincentives. b. Rationalpeoplethinkatthemargin. c. Tradecanmakeeveryonebetteroff. d. Marketsareusuallyagoodwaytoorganizeeconomicactivity.ANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.224-Givenascenario,identifywhichprincipleofeconomicinteractionbestdescribesit.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  121.01.1-MC-MANK08122. Governmentpoliciescanchangethecostsandbenefitsthatpeopleface.Thosepolicieshavethepotentialto a. alterpeople’sbehavior. b. alterpeople’sdecisionsatthemargin. c. produceresultsthatpolicymakersdidnotintend. d. Alloftheabovearecorrect.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  122.01.1-MC-MANK08123. RalphNader'sbookUnsafeatAnySpeedcausedCongresstorequire a. safetyglassinallnewcars. b. seatbeltsinallnewcars. c. airbagsinallnewcars. d. stricterdrunkdrivinglawsinallstates.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  123.01.1-MC-MANK08124. Followingtheimplementationoflawsrequiringautomobilestohaveseatbelts,whichofthefollowingoccurred? a. Anindividual’sprobabilityofsurvivinganautoaccidentrose.CopyrightCengageLearning.PoweredbyCognero.Page 45  b. Therewasanincreaseinpedestriandeaths. c. Therewasanincreaseinautomobileaccidents. d. Alloftheabovearecorrect.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  124.01.1-MC-MANK08125. U.S.lawsrequiringthatdriverswearseatbeltshaveresultedin a. areductioninbothdriverdeathsandpedestriandeaths. b. feweraccidentsandfewerdeathsperaccident. c. fewerdriverdeaths,feweraccidentsandfewerpedestriandeaths. d. littlechangeinthenumberofdriverdeaths,butmoreaccidentsandmorepedestriandeaths.ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  125.01.1-MC-MANK08126. Evidenceindicatesthatseatbeltlawshaveledto a. fewerpedestriandeaths. b. fewerautomobileaccidents. c. fewerdeathsperautomobileaccident. d. Alloftheabovearecorrect.ANSWER:  cDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  126.01.1-MC-MANK08127. Oneeffectofthegovernment-imposedseatbeltlawintheU.S.hasbeen a. adramaticdecreaseinthenumberofpedestriandeaths. b. saferdriving. c. anincreaseinthenumberofaccidents. d. adramaticdecreaseinthenumberofdriverdeaths.ANSWER:  cDIFFICULTY:  ModerateCopyrightCengageLearning.PoweredbyCognero.Page 45 LEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  127.01.1-MC-MANK08128. Basedontheavailableevidence,whichofthefollowinggroupsbenefitsmostfrommandatoryseatbeltlaws? a. automakers b. pedestrians c. drivers d. ownersofcollision-repairshopsANSWER:  dDIFFICULTY:  ChallengingLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  128.01.1-MC-MANK08129. Whichofthefollowingcanpolicydo? a. alterincentives b. altertrade-offs c. changeopportunitycosts d. Alloftheabovearecorrect.ANSWER:  dDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  129.01.1-MC-MANK08130. SupposethestateofIllinoispassesalawthatbanssmokinginrestaurants.Asaresult,residentsofWisconsinwhodonotlikebreathingsecond-handsmokebegindrivingacrossthebordertoIllinoistoeatatrestaurantsthere.Whichofthefollowingprinciplesdoesthisbestillustrate? a. Peoplerespondtoincentives b. Rationalpeoplethinkatthemargin c. Tradecanmakeeveryonebetteroff d. MarketsareusuallyagoodwaytoorganizeeconomicactivityANSWER:  aDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.224-Givenascenario,identifywhichprincipleofeconomicinteractionbestdescribesit.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 IncentivesKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  130.01.1-MC-MANK08131. IntheformerSovietUnion,producerswerepaidformeetingoutputtargets,notforsellingproducts.Underthosecircumstances,whatweretheeconomicincentivesforproducers? a. toproducegoodqualityproductssothatsocietywouldbenefitfromtheresourcesused b. toconserveoncosts,soastomaintainefficiencyintheeconomy c. toproduceenoughtomeettheoutputtarget,withoutregardforqualityorcost d. toproducethoseproductsthatsocietydesiresmostANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  131.01.1-MC-MANK08132. Whichofthefollowingisnotoneofthefourprinciplesofindividualdecisionmaking? a. Peoplefacetrade-offs. b. Tradecanmakeeveryonebetteroff. c. Peoplerespondtoincentives. d. Rationalpeoplethinkatthemargin.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingKEYWORDS:  BLOOM'S:KnowledgeCUSTOM ID:  132.01.1-MC-MANK08133. Whichofthefollowingstatementsexemplifiesaprincipleofindividualdecisionmaking? a. Tradecanmakeeveryonebetteroff. b. Governmentscansometimesimprovemarketoutcomes. c. Thecostofsomethingiswhatyougiveuptogetit. d. Alloftheabovearecorrect.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.224-Givenascenario,identifywhichprincipleofeconomicinteractionbestdescribesit.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  133.01.1-MC-MANK08134. Whichofthefollowingisnotanexampleofagrouprespondingtoanincentive?CopyrightCengageLearning.PoweredbyCognero.Page 45  a. Studentsattendclassbecauseofanattendancepolicythatreducestheirgradeforabsences. b. Consumersbuymoreofaproductwhenitisonsaleatareducedprice. c. Universitiesofferfeweronlineclasseswhentheygeneratemorerevenuethantraditionalclasses. d. Employeesworkhardertoearnhighercommissions.ANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.224-Givenascenario,identifywhichprincipleofeconomicinteractionbestdescribesit.TOPICS:  EconomicthinkingIncentivesKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  134.01.1-MC-MANK08135. Michaelisacollegestudent.Hecaneitherbuyatextbookfor$100orsaveupforaroadtriphewantstotakeduringthesummer.Thisillustratestheprinciplethat a. tradecanmakeeveryonebetteroff. b. peoplefacetrade-offs. c. rationalpeoplethinkatthemargin. d. peoplerespondtoincentives.ANSWER:  bDIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingTradeoffsKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  135.01.1-MC-MANK08136. Thebalancebetweenmaximizingasociety'sincomeandanequaldistributionofthatincomeisanillustrationof a. scarcity. b. trade-offs. c. theforcesofsupplyanddemand. d. noneoftheabove.ANSWER:  bDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  TradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  136.01.1-MC-MANK08137. Thebalancebetweenefficiencyandequalityisanillustrationof a. scarcity. b. trade-offs. c. theforcesofsupplyanddemand. d. noneoftheabove.ANSWER:  bCopyrightCengageLearning.PoweredbyCognero.Page 45 DIFFICULTY:  EasyLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  TradeoffsKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  137.01.1-MC-MANK08138. Timdecidestospendfourhoursplayingvideogamesratherthanattendinghisclasses.Hisopportunitycostofplayinggamesis a. thevalueoftheknowledgehewouldhavereceivedhadheattendedhisclasses. b. the$50hecouldhaveearnedifhehadworkedathisjobforthosefourhours. c. thevalueofhistimeplayingvideogamesminusthevalueofattendingclasses. d. nothing,sincehevaluedplayingvideogamesmorethanattendingclasses.ANSWER:  aDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  138.01.1-MC-MANK08139. Janedecidestospendfourhoursworkingovertimeratherthangoingtoafamilygathering.Sheearns$12.50perhourforovertimework.Heropportunitycostofworkingis a. the$50sheearnsworking. b. the$50minustheenjoymentshewouldhavereceivedfromgoingtothefamilygathering. c. theenjoymentshewouldhavereceivedhadshegonetothefamilygathering d. nothing,sinceshewantedtoworkmorethanshewantedtoattendthefamilygatheringANSWER:  cDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.302-Identifytheopportunitycostofanaction.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:ApplicationCUSTOM ID:  139.01.1-MC-MANK08140. ConsiderLarry'sdecisiontogotocollege.Ifhegoestocollege,hewillspendatotalof$120,000ontuition,$30,000onroomandboard,and$3,500onbooksoverfouryears.Ifhedoesnotgotocollege,hewillearn$30,000annuallyworkinginastoreandspend$7,000onroomandboardeachyear.Larry'scostofgoingtocollegeis a. $123,500. b. $153,500. c. $190,500 d. $245,500ANSWER:  dDIFFICULTY:  ModerateLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingCopyrightCengageLearning.PoweredbyCognero.Page 45 OpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  140.01.1-MC-MANK08141. IfJaneattendsgraduateschool,itwilltakehertwoyears,duringwhichtimeshewillearnnoincome.Shewillpayatotalof$100,000fortuition,$20,000forroomandboard,and$2,000forbooks.Ifshespendsthetwoyearsworkingratherthanattendingcollege,shewillpayatotalof$18,000forroomandboard,paynointuition,andbuynobooks.Basedonthisinformation,Jane'seconomiccostofattendinggraduateschoolwouldbe$175,000if,overthetwoyears,shecouldearnatotalof a. $53,000insteadofattendinggraduateschool. b. $55,000insteadofattendinggraduateschool. c. $71,000insteadofattendinggraduateschool. d. $73,000insteadofattendinggraduateschool.ANSWER:  cDIFFICULTY:  DifficultLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.TOPICS:  EconomicthinkingOpportunitycostKEYWORDS:  BLOOM'S:AnalysisCUSTOM ID:  141.01.1-MC-MANK08142. Whichofthefollowingindustrieshasamarginalcostthatisclosetozero? a. automobile b. aircraft c. software d. furnitureANSWER:  cDIFFICULTY:  DifficultLEARNING OBJECTIVES:  ECON.MANK.012-Applybasic,economicprinciplesofindividualdecisionmakingthatdeterminehowaneconomygenerallyworks.ECON.MANK.051-Describewhatitmeanstothinkatthemargin.TOPICS:  MarginalthinkingEconomicthinkingKEYWORDS:  BLOOM'S:ComprehensionCUSTOM ID:  142.01.1-MC-MANK08CopyrightCengageLearning.PoweredbyCognero.Page 45