Sunk costs
a. can only be measured in monetary terms
b. are opportunity costs
c. should influence a person's choice if that person is a marginal decision maker
d. lower the efficiency of production
e. should not be considered when making economic decisions
QUESTION 2Suppose you have purchased a non-refundable plane ticket and, at the last moment, you cannot take the trip. You can, however, sell the ticket. If you paid 700 for the ticket, the cost of sending the ticket to someone through overnight mail is 20, and you spend 10 on a courier to get the ticket to the post office for overnight delivery, what is the minimum you should accept for the ticket?
a. 700 because that is what the ticket cost.
b. 720 because that is the cost of the ticket and of getting it to the buyer.
c. 730 because that is the total cost of the ticket and getting it to the buyer.
d. More than 730, so that you can make a profit.
e. 30 because the 700 is a sunk cost.
QUESTION 3A university should not disband its football team if it has already paid for the stadium.
a. True
b. False
QUESTION 4The opportunity cost of an activity is best measured
a. only by the monetary costs
b. by the number of alternative activities that were forgone
c. by the cost difference between the chosen activity and the next best alternative
d. by the value expected from the best alternative that is forgone
e. as the time wasted choosing among various activities
QUESTION 5The opportunity cost of a particular activity
a. must be the same for everyone
b. is the value of all alternative activities that are forgone
c. has a maximum value equal to the minimum wage
d. varies from person to person
e. can usually be known with certainty
QUESTION 6Melissa is a self-employed lawyer who chooses a higher-priced restaurant 2 miles from home over a cheaper restaurant 15 miles from home. Which of the following is the most likely explanation for her behavior?
a. The opportunity cost of her time is very low.
b. She doesn't take travel time into consideration.
c. She doesn't like to cook or doesn't know how.
d. The prices at the more expensive restaurant understate the opportunity cost of eating there.
e. The higher monetary cost of the more expensive restaurant is offset by the higher opportunity cost of the lower-priced restaurant.
QUESTION 7If you enjoy playing golf, the opportunity cost of cleaning your room
a. is the same on sunny days as it is on rainy days
b. is greater on sunny days than it is on rainy days
c. is smaller on sunny days than it is on rainy days
d. does not change with the weather conditions
e. is equal to the opportunity cost of any other chore you have to do that day
QUESTION 8The term opportunity cost suggests that
a. in any exchange situation where one person gains, someone else must lose
b. not all individuals make the most of life's opportunities
c. executives do not always recognize opportunities for profit as quickly as they should
d. the only factor that is important in decision making is cost
e. because goods are scarce, in order to get some good you must give up some other good in return
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