Question 1

Lydia runs a nail salon and is considering extending her hours. The table below shows the total revenue for each extra hour open. If Lydia must pay $10 per hour in wages, how many extra hours should she stay open to maximize profit?

Extra Hours Open | Total Revenue ($)
1 | 50
2 | 75
3 | 95
4 | 110
5 | 120
6 | 125

Accepted Answer

4 hours

Question 2

Using the same table for Lydia's nail salon, what is the marginal benefit of staying open for an extra two hours instead of one hour?

Accepted Answer

$25

Question 3

Thuy Anh runs a flower shop and pays $16 per hour in wages. The table below shows total revenue for each extra hour open. What is the marginal cost of staying open for an extra three hours instead of two hours?

Extra Hours Open | Total Revenue ($)
1 | 25
2 | 45
3 | 70
4 | 90
5 | 105
6 | 110

Accepted Answer

$16

Question 4

Soo Jin is considering moving from a shared apartment ($800/month) to a studio ($1,100/month). As a rational economic agent, what can you conclude about Soo Jin's decision?

Accepted Answer

Soo Jin figures that the additional benefit of having her own place is at least $300.

Question 5

Pookie restores pinball machines. After spending $300, he discovers he can sell the machine 'as is' for $1,000, or spend $1,100 more to finish restoration and sell for $2,000. What is the marginal benefit of completing the restoration?

Accepted Answer

$1,000

Question 6

Suppose a hat manufacturer sells 2,000 hats per week and makes a profit of $5,000. If the cost per hat rises by $1, what will happen to the profit?

Accepted Answer

Its profit will be $1,000 lower.

Question 7

Damian shares a food truck with his sister ($500/month). He decides to get his own truck ($1,400/month). What is the minimum additional benefit Damian must expect to justify his decision?

Accepted Answer

Damian figures that the additional benefit of having his own truck is at least $900.

Question 8

The Coffee Nook sells cappuccinos for $2.50 and Russian tea cakes for $1.00. What is the opportunity cost of buying a cappuccino?

Accepted Answer

2.5 Russian tea cakes

Question 9

Water bottles produced by companies like HydrateSpark and REBO, which interact with smartphone apps, are best described as:

Accepted Answer

Items produced in a perfectly competitive market.

Question 10

The demand by all consumers of a given good or service is the ________ for the good or service.

Accepted Answer

market demand

Question 11

If the price of chocolate increases, then there will be:

Accepted Answer

a decrease in the quantity of chocolate demanded.

Question 12

By drawing a demand curve with ________ on the vertical axis and ________ on the horizontal axis, economists assume that the most important determinant of the demand for a good is the ________ of the good.

Accepted Answer

price; quantity; price

Question 13

The law of demand implies, holding everything else constant, that as the price of bagels increases:

Accepted Answer

the quantity of bagels demanded will decrease.

Question 14

The table below shows the demand schedules for loose leaf tea for two individuals (Sunil and Mia) and the rest of the market. At a price of $5, the quantity demanded in the market would be:

Loose leaf Tea Price per lb. | Sunil's Quantity Demanded (lbs) | Mia's Quantity Demanded (lbs) | Rest of Market Quantity Demanded (lbs)
5 | 12 | 5 | 64

Accepted Answer

146 lbs.

Question 15

If the price of loose leaf tea rises from $3 to $4, the market quantity demanded would:

Accepted Answer

decrease by 32 pounds.

Question 16

The opportunity cost of taking a semester-long economics class is:

Accepted Answer

equal to the highest value of an alternative use of the time and money spent on the class.

Question 17

Serena and Haley are jewelers. Serena can make 6 bracelets or 16 necklaces per week. What is Serena's opportunity cost of making a bracelet?

Accepted Answer

2.67 necklaces

Question 18

Fred and Barney can make pogo sticks or unicycles. Fred can make 24 pogo sticks or 8 unicycles per month. What is Fred's opportunity cost of making a pogo stick?

Accepted Answer

1/3 of a unicycle

Question 19

Barney can make 28 pogo sticks or 14 unicycles per month. What is Barney's opportunity cost of making a unicycle?

Accepted Answer

2 pogo sticks

Microeconomics Study Guide: Marginal Analysis, Opportunity Cost, and Demand

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