Trade Offs and Opportunity Costs, Costs and Revenues

Which of the following represents a marginal cost?

• mortgage payments

• the sum of fixed costs and

  variable costs

• wages and raw materials

• the cost of producing one additional unit

The total cost of producing jeans is $5,000, and a company produces 1,000 pairs of jeans. The average total cost is

• $.20

• $5.00

• $1,000.00

• $6,000.00

According to rational economic decision making, we should accept an option when

• the costs outweigh the

  benefits

• the benefits outweigh

  the costs

• there are no costs

• there are no benefits

On what economic priniciple is the woman remarking?

• Pizza is scare in the United

  States.

• Pizza is a need and not a want.

• Pizza is a valuable resource and therefore has a high cost.

• The benefits of buying a pizza in Italy do not outweigh the costs.

What does the woman think of the man's choice?

• He is making a rational

  economic decision.

• His is not making a

  rational economic

  decision.

• He is considering only the

  costs and not the

  benefits.

• His is correctly using a

  cost-benefit analysis.

Which of the following is an opportunity cost of the man's decision to go to

Italy to buy pizza?

• The money spend on the

  trip to Italy could have

  been spent on other

  things.

• The man will still have to

  purchase food and beverage on the flight.

• The pizza in Italy will

  taste better than pizza

  made at home.

• The $2 coupon is just an excuse to take a vacation.

What does a cost-benefit analysis compare?

• marginal costs and marginal benefits

• marginal costs and total costs

• total costs and total revenue

• total revenue and marginal benefits

If the fixed cost of producing dresses are $1,000.00 and the variable costs are $500.00, then the total cost is

• $500

• $10.00

• $1,500.00

• $4,500.00

The loss of years of income resulting from the decision to go to college is the

• marginal cost

• variable cost

• opportunity cost

• total cost

What does this graph show?

• The marginal benefit decreases as the marginal cost increases.

• The marginal benefit increases as the marginal cost increases.

• The marginal cost is the same for all acres.

• The marginal benefit is never greater than the marginal cost.