Question : 3.3  Optimization in Differences: Marginal Analysis 1) Which of the following : 1377313

3.3  Optimization in Differences: Marginal Analysis

1) Which of the following statements is true?

A) Optimization in levels is based on ordinal analysis.

B) Optimization in differences is based on marginal analysis.

C) Optimization in differences is often faster than optimization in levels as it considers all aspects of the feasible alternatives.

D) Optimization in levels is often slower to implement than optimization in differences as it considers only the aspects in which alternatives differ.

2) Assume that an individual has to decide between a two-day vacation and a three-day vacation to the same place. If he uses optimization in differences, he will:

A) only think about the net benefits of the extra day.

B) compare the total net benefits of both alternatives.

C) choose the three-day vacation only if the costs incurred on the third day exceed the benefits he receives.

D) spend more time to come to a decision than if he would have used optimization in levels.

3) Refer to the scenario above. Which of the following statements is true?

A) Both optimization techniques will provide an efficient outcome, but optimization in levels will be faster to implement.

B) Both optimization techniques will provide an efficient outcome, but optimization in differences will be faster to implement.

C) Only optimization in differences can be used to arrive at an optimum choice. Optimization in levels will not be applicable in this case.

D) Only optimization in levels can be used to arrive at an optimum choice. Optimization in differences will not be applicable in this case.

4) Refer to the scenario above. If Sarah is optimizing in differences, then which of the following statements is true?

A) An optimizer will rent the hotel room for three days, if the benefit of staying for the third day exceeds the cost of staying for the third day.

B) An optimizer will rent the hotel room for three days, if the benefit of staying for the third day exceeds the benefits of staying for the first two days.

C) An optimizer will rent the hotel room for three days, if the net benefit of staying for three days exceeds the net benefit of staying for two days.

D) An optimizer will rent the hotel room for three days, if the cost of staying for the first two days is less than the cost of staying for the third day.

5) Refer to the scenario above. Which of the following is true, if the individual is optimizing in levels?

A) An optimizer will rent the hotel room for three days, if the net benefit of staying for the third day is negative.

B) An optimizer will rent the hotel for three days, if the cost of staying for two days exceeds the cost of staying for three days.

C) An optimizer will rent the hotel room for three days, if the net benefit of staying for three days exceeds the net benefit of staying for two days.

D) An optimizer will rent the hotel for three days, if the total benefit of staying for three days exceeds the total benefits of staying for two days.

6) A cost-benefit calculation that focuses on the difference between a feasible alternative and the next feasible alternative is called:

A) marginal analysis.

B) cardinal analysis.

C) Pareto analysis.

D) ordinal analysis.

7) Which of the following is an example of marginal analysis?

A) To determine the optimal number of workers, a firm calculates the net benefits of hiring an extra worker.

B) To determine the optimal amount of fertilizer to be used, a farmer calculates the total benefits of using a given amount of fertilizer.

C) To choose the optimal apartment to rent, an individual estimates the net benefits of renting an apartment close to his/her place of work.

D) To determine the optimal output that a firm should sell, the manager calculates the total revenue earned by selling different levels of output.

8) Which of the following statements is true of marginal analysis?

A) Marginal analysis is a tool used in optimization in levels.

B) Marginal analysis compares the consequences of doing one more step of something.

C) Marginal analysis of alternatives will mostly give an outcome different from optimization in levels.

D) Marginal analysis involves the calculation of total net benefits of all the available alternatives.

9) ________ uses the concept of marginal analysis to determine the optimum choice.

A) Ordinal analysis

B) Optimization in levels

C) Optimization in frames

D) Optimization in differences

10) ________ is the incremental cost generated by moving from one feasible alternative to the next feasible alternative.

A) Total cost

B) Indirect cost

C) Marginal cost

D) Average cost