Eco 365

Microeconomics Practice Exam One (Chp 1 - 4)

1. The marginal benefit from consuming another unit of a good: 

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

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

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

D. equals the total benefit obtained from the consumption of all prior units.

 2. Mary buys cell-phone services from a company that charges $30 per month. For that $30 she is allowed 600 minutes of free calls and then pays 25 cents per minute for any calls above 600 minutes. Mary has used 600 minutes this month so far. What is her marginal cost per minute of making additional calls? 

A. 25 cents

B. 10 cents

C. 5 cents

D. Zero

3. Suppose the marginal cost of dating Perry is $30 and the marginal benefit is worth $40 to you. Following economic reasoning, you should: 

A. date Perry.

B. not date Perry.

C. determine what your sunk costs are.

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

4. Alan is sitting in a bar drinking beers that cost $1 each. According to the economic decision rule, Alan will quit drinking when the marginal: 

A. benefit to him of an additional beer is less than $1.

B. cost to him of an additional beer is less than the marginal benefit.

C. cost remains at $1.

D. benefit to him of an additional beer is greater than $1.

5. Opportunity cost: 

A. includes only monetary outlays.

B. is the net benefit forgone by not undertaking the next best alternative.

C. is nonexistent for some choices.

D. is the same as sunk cost.

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

A. whose next-best option is to flip hamburgers and who has access to no student loans.

B. whose next-best option is to be a retail salesperson and whose family is extremely wealthy.

C. whose next-best option is to drive a school bus but who has the promise of a six-figure salary after college.

D. who is capable of competing...