Q: In marginal analysis, what is the condition for choosing the optimal option?

$$\text{Marginal Benefit} = \text{Marginal Cost}$$

Question 1

Which of the following best describes optimization using total value?

Accepted Answer

Calculating the total value of each feasible option and picking the one with the highest total value.

Question 2

Suppose you are deciding how many hours to spend watching videos on your tablet. The net benefit for 2 hours is $$30, for 3 hours is 25$$, and for 4 hours is $0. According to optimization using total value, how many hours should you spend?

Accepted Answer

2 hours

Question 3

In marginal analysis, what is the condition for choosing the optimal option?

Accepted Answer

$$	ext{Marginal Benefit} = 	ext{Marginal Cost}$$

Question 4

Which statement about optimization using total value and marginal analysis is correct?

Accepted Answer

Both techniques yield identical answers when applied correctly.

Question 5

A firm faces marginal revenue $$MR = 28 - Q$$ and marginal cost $$MC = 4 + Q. $$What is the profit-maximizing output $$Q^*$$?

Accepted Answer

$$Q^* = 12$$

Question 6

In the context of game theory, what is a Nash equilibrium?

Accepted Answer

A situation where each player chooses a strategy that maximizes their payoff given the strategies of others.

Question 7

Which of the following is NOT a reason why making the best choice may still result in a bad outcome?

Accepted Answer

Having perfect information

Question 8

If the marginal benefit of moving from 2 to 3 hours of tablet use is $$20$$ and the marginal cost is $$25$$, what should you do according to marginal analysis?

Accepted Answer

Stay at 2 hours

Question 9

Which of the following is a real-world example of a zero-sum game?

Accepted Answer

Rock-paper-scissors

Question 10

In the prisoners’ dilemma, why do both players often choose to defect even though cooperation would yield a better outcome?

Accepted Answer

Because defecting is a dominant strategy for both players.

Question 11

Suppose the net benefit of using a new tablet for 3 hours is $$40$$, and for 4 hours is $$25. $$What is the marginal net benefit of increasing usage from 3 to 4 hours?

Accepted Answer

$$-15$$

Question 12

Which step is NOT part of marginal analysis for optimization?

Accepted Answer

Choose the alternative with the highest total cost.

Question 13

If a player’s strategy is a best response to the equilibrium strategies of other players, what concept does this describe?

Accepted Answer

Nash equilibrium

Question 14

In a simultaneous-move game, what information do players typically have when making their decisions?

Accepted Answer

They know the rules and possible strategies, but not the choices of other players.

Question 15

Which of the following is true about zero-sum thinking?

Accepted Answer

It ignores the possibility of mutual gains from trade.

Question 16

A student is deciding how many hours to practice for a football game. The marginal benefit of the fourth hour is $$2$$ points, and the marginal cost is $$7$$ points. Should the student practice the fourth hour?

Accepted Answer

No, because marginal cost exceeds marginal benefit.

Question 17

Which of the following is NOT a step in formalizing a game in game theory?

Accepted Answer

Calculating the total cost of each option

Question 18

If a firm’s marginal revenue is $$MR = 28 - Q$$ and marginal cost is $$MC = 4 + Q$$, what is the marginal revenue when $$Q = 3$$?

Accepted Answer

$$MR = 25$$

Question 19

In the context of the scrolling tablet example, what is the net benefit of watching for 1 hour if the total benefit is $$35$$ and the total cost is $$20$$?

Accepted Answer

$$15$$

Question 20

Which of the following is a multi-person decision problem analyzed using game theory?

Accepted Answer

Negotiating an international trade agreement

Lecture 3: Optimization, Game Theory, and Equilibrium in Microeconomics

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