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Microeconomics PracticeExam One (Chp 1-4)

1. The marginal benefit fiom consuming another unit ofagood:

A.    must equal the marginal cost or the unit will not be consumed.

B.    must be less than the marginal cost or the unit wil not be consumed.

C. equals the increase ii total benefits from consuming the unit

D.    equals the total benefit obtahed from the consumption of al prior units.

2.    Mary buys cell-phone services from a company that charges $30 per month. For that $30 she f allowed 600 mhufes offree calLs and then pays 25 cents per minutę for any calLs abo\e 600 minutes. Mary has iKed 600 mhutes this month so lar. What is her marghal cost per minutę of making additional całs?

A.    25 cents

B.    10 cents

C.    5 cents

D.    Zero

3.    Suppose the marginal cost ofdating Peny' Ls $30 and the marginal benefit Ls worth $40 to you. Following economic reasoning, you should:

A.    datę Perry.

B.    not datę Perry'.

C.    detemihe what your sunk costs are.

D.    determhe what your total benefits and total costs are.

4.    Afan Ls sitting ii a bar drinking been? that cost $1 each. According to the economic declsbn rule, Alan will quit drink hg when the marginal:

A.    benefit to him of an additbnal beerls bss than $1.

B.    cost to him of an additional beer f bss than the marginal benefit.

C. costremahs at$l.

D.    benefit to him of an additbnal beerls greater than $1.

5.    Opportunhy cost:

A.    includes only monetary outlays.

B.    Ls the net benefit forgone by not undertaking the next best ahemative.

C.    Ls nonexLstent for some choices.

D.    Ls the same as sunk cost.

6.    The opportunity cost of attending college Ls likely to be highest for a high school graduate:

A.    whose next-best optbn Ls to flip hambirgers and who has access to no student loans.

B. whose next-best option Ls to be a retail salesperson and whose la miły is extremely weahhy.

C. whose next-best option Ls to drh e a school bus but who has the promise of a sbc-figure salary after college.

D.    who Ls capable ofcompeting successfully in professional tennh.

7.    The price mechanizm that guides peopb's actions Ls called the:

A.    imisible market force.

B.    invisible hand.

C. invisible handshake.

D.    imisible foot.