Q: A rational decision-maker will choose an action only if:

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

Question 1

Which of the following is NOT one of the three key economic ideas introduced in the course?

Accepted Answer

Markets always produce efficient outcomes

Question 2

Which of the following best describes opportunity cost?

Accepted Answer

The value of the next best alternative that must be forgone

Question 3

A rational decision-maker will choose an action only if:

Accepted Answer

$	ext{Marginal Benefit} \geq 	ext{Marginal Cost}$

Question 4

Which of the following is an example of an implicit cost?

Accepted Answer

Foregone salary from not working another job

Question 5

In a command economy, who decides what, how, and for whom to produce?

Accepted Answer

The central authority or government

Question 6

Which scenario best illustrates the concept of responding to incentives?

Accepted Answer

A city bans plastic bags, leading to an increase in reusable bag usage

Question 7

Suppose the marginal benefit of the third training session is $\$50$ and the marginal cost is $\$60$. According to marginal analysis, should you attend the third session?

Accepted Answer

No, because the marginal cost exceeds the marginal benefit

Question 8

Which of the following is a real-world example of opportunity cost?

Accepted Answer

Choosing to attend college instead of working full-time

Question 9

Which of the following statements about marginal analysis is correct?

Accepted Answer

Marginal analysis compares the additional benefit and additional cost of an action

Question 10

If a country is classified as 'Repressed' in terms of economic freedom, what is most likely true?

Accepted Answer

The government heavily restricts economic activity

Question 11

Which of the following best explains why long lines and little variety were common in the USSR?

Accepted Answer

Production decisions were made by a central authority

Question 12

Which of the following is an example of a marginal decision?

Accepted Answer

Deciding whether to eat one more slice of pizza

Question 13

Which equation represents the profit-maximizing principle of marginal analysis?

Accepted Answer

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

Question 14

Which of the following is NOT a type of cost considered by rational decision-makers?

Accepted Answer

Sunk cost

Question 15

A government offers cash bonuses to teachers for higher student test scores. This is an example of:

Accepted Answer

A positive incentive

Question 16

Which of the following best describes the difference between explicit and implicit costs?

Accepted Answer

Explicit costs are direct monetary payments; implicit costs are non-monetary opportunity costs

Question 17

Which of the following is a question all societies must answer?

Accepted Answer

How to allocate resources among competing uses?

Question 18

If the marginal benefit of the fourth unit is $\$20$ and the marginal cost is $\$30$, what should a rational person do?

Accepted Answer

Not consume the fourth unit

Question 19

Which of the following best illustrates the concept of 'optimal decisions are made at the margin'?

Accepted Answer

A student studies one more hour if the expected grade improvement outweighs the lost leisure time

Question 20

Which of the following is a likely unintended consequence of a plastic bag ban, as discussed in the materials?

Accepted Answer

An increase in E. coli infections due to reusable bags

Foundations of Microeconomics: Basic Principles, Economic Models, and Marginal Analysis

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