A production possibilities curve shows the various combinations of two outputs that:
a. consumers would like to consume.
b. producers would like to produce.
c. an economy can produce.
d. an economy should produce.
QUESTION 2Which of the following is an example of an organization using marginal analysis?
a. A hotel manager calculating the average cost per guest for the past year.
b. A farmer hoping for rain.
c. A government official considering what effect an increase in military goods production will have on the production of consumer goods.
d. A business calculating economic profits.
QUESTION 3Which word or phrase best completes the following sentence? Marginal analysis means evaluating _________ changes from a current situation.
a. positive or negative.
b. infinite.
c. alternating.
d. maximum.
QUESTION 4The principle that the opportunity cost increases as the production of one output expands along the production possibilities curve is the:
a. law of increasing opportunity costs.
b. law of supply.
c. law of demand.
d. law of diminishing returns.
QUESTION 5According to marginal analysis, you should spend more time studying economics if the extra benefit from an additional hour of study:
a. is positive.
b. outweighs the extra cost.
c. exceeds the benefits of the previous hour of study.
d. will raise your exam score.
QUESTION 6A local restaurant offers an all you can eat Sunday brunch for 12 . Susan eats four servings, but leaves half of a fifth helping uneaten. Why?
a. Her marginal value of a serving of brunch has fallen below 12.
b. Her marginal value of a serving has fallen below 2.36 (12 divided by 5 servings).
c. Her marginal value of food has fallen to zero.
d. The total value she places on brunch today exactly equals 12.
QUESTION 7Ralph wants to buy some milk and a box of cereal. If Ralph buys 2 quarts of milk at 1 per quart, the box of cereal costs 75 cents. If he buys 3 quarts of milk at 1 per quart, the box of cereal is free. For Ralph, the marginal cost of the third quart of milk is:
a. zero. b. 25 cents.
c. 75 cents. d. 1.
QUESTION 8Susan wishes to buy gasoline and have her car washed. She finds that if she buys 9 gallons of gasoline at 1.50 per gallon, the car wash costs 1, but if she buys 10 gallons of gasoline, the car wash is free. For Susan, the marginal cost of the tenth gallon of gasoline is:
a. zero. b. 50 cents.
c. 1 d. 1.50.
QUESTION 9Just before class, Jim tells Stuart, Stuart, you shouldn't skip class today because you have paid tuition to enroll in the class. Stuart ignores Jim's advice, and instead makes the decision of whether to attend based on the importance to his grade that he feels he'd be missing that day in class relative to his value of the extra time he could have to finish the video game he is playing. To an economist, Stuart is:
a. using marginal analysis. b. ignoring the total value of attending class.
c. ignoring the concept of opportunity cost. d. irresponsible.
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