101.Supposethecostofoperatinga75roomhotelforanightis$6,000andthereare5emptyroomsfortonight.Themarginalcostperroompernight
a.is$40.
b.is $80.
c.is $120.
d.cannotbedeterminedfromtheinformationgiven.
102.Supposethecostofoperatinga75roomhotelforanightis$6,000andthereare5emptyroomsfortonight.Ifthemarginalcostofoperatingoneroomforonenightis$40,thehotelmanagershouldrentoneoftheemptyroomsonlyif a customeris willing topay
a.morethan$40,astheaveragebenefitwillexceedthemarginalcost.
b.morethan$40,asthemarginalbenefitwillexceedthemarginalcost.
c.morethan$80,astheaveragebenefitwillexceedthemarginalcost.
d.morethan$80,asthemarginalbenefitwillexceedthemarginalcost.
103.Itcostsacompany$35,000toproduce500graphingcalculators.Thecompany’scostwillbe$35,080ifitproducesanadditionalgraphingcalculator.Ifthecompanyproduces501graphingcalculatorsthen
a.itsaveragecostisgreaterthanitsmarginalcost.
b.itsaveragecostanditsmarginalcostareequal.
c.itsaveragecostislessthanitsmarginalcost.
d.Thiscannotbedeterminedfromtheinformationgiven.
104.DeShawnhasspent$600purchasingandrepairinganoldfishingboat,whichheexpectstosellfor$900oncetherepairsarecomplete.DeShawndiscoversthat,inadditiontothe$600hehasalreadyspent,heneedstomakeanadditionalrepair,whichwillcostanother$400,inordertomaketheboatworth$900topotentialbuyers.Hecanselltheboatasitisnowfor$400.Whatshouldhedo?
a.Heshouldselltheboatasitisnowfor$400.
b.Heshouldkeeptheboatsinceitwouldnotberationaltospend$1,000onrepairsandthenselltheboatfor$900.
c.Heshouldcompletetherepairsandselltheboatfor$900.
d.Itdoesnotmatterwhichactionhetakes;theoutcomeisthesameeitherway.
105.Betty’sBakerybakesfreshbreadeverymorning.Anybreadnotsoldbytheendofthedayisthrownaway.AloafofbreadcostsBetty$2.00toproduce,andshepricesloavesofbreadat$3.50perloaf.SupposeneartheendofonedayBettystillhas12loavesofbreadonhand.Whichofthefollowingiscorrect?
a.Bettyshouldonlyselltheremainingbreadfor$3.50perloafsincethatistheregularprice.
b.Bettyshouldonlyselltheremainingbreadfor$2.00perloaformoresincethatiswhatthebreadcoststomake.
c.Bettyshouldbewillingtoselltheremainingbreadforanypriceabove$0perloafsinceshewillhavetothrowitawayifshedoesnotsellitforsomething.
d.Bettyshouldjustthrowthebreadawayandchangethepriceofherbreadstartingtomorrowtomakesureshesellsallofherbreadeachday.
106.Abagelshopsellsfreshbakedbagelsfrom5a.m.until7p.m.everyday.Theshopdoesnotsellday-oldbagels,soallunsoldbagelsarethrownawayat7p.m.eachday.Thecostofmakingandsellingadozenbagelsis$1.00;therearenocostsassociatedwiththrowingbagelsaway.Ifthemanagerhas8dozenbagelsleftat6:30p.m.onaparticularday,whichofthefollowingalternativesismostattractive?
a.Lowerthepriceoftheremainingbagels,evenifthepricefallsbelow$1.00perdozen.
b.Lowerthepriceoftheremainingbagels,butundernocircumstancesshouldthepricefallbelow$1.00perdozen.
c.Throwthebagelsawayandproduce8fewerdozenbagelstomorrow.
d.Startingtomorrow,lowerthepriceonallbagelssotheywillallbesoldearlierintheday.
107.Rickbuysa1966Mustangfor$3,000,planningtorestoreandsellthecar.Hegoesontospend$9,000restoringthecar.Atthispointhecansellthecarfor$10,000.Asanalternative,hecanspendanadditional$3,000replacingtheengine.Withanewenginethecarwouldsellfor$13,000.Rickshould
a.completetherepairsandsellthecarfor$13,000.
b.sellthecarnowfor$10,000.
c.nevertrysuchanexpensiveprojectagain.
d.beindifferentbetween(i)sellingthecarnowand(ii)replacingtheengineandthensellingit.
108.Yvettebuysandsellsrealestate.Twoweeksago,shepaid$300,000forahouseonPineStreet,intendingtospend$50,000 on repairs and then sell the house for $400,000. Last week, the city government announced a plan to build a new landfill on Pine Street just down the street from the house Yvette purchased. As a result of the city’s announced plan, Yvette is weighing two alternatives: She can go ahead with the $50,000 in repairs and then sell the house for $290,000, or she can forgo the repairs and sell the house as it is for $250,000. She should
a.keepthehouseandliveinit.
b.goaheadwiththe$50,000inrepairsandsellthehousefor$290,000.
c.forgotherepairsandsellthehouseasitisfor$250,000.
d.movethehousefromPineStreettoamoredesirablelocation,regardlessofthecostofdoingso.
109.Youareconsideringstayingincollegeanothersemestersothatyoucancompleteamajorineconomics.Indecidingwhetherornottostayyoushould
a.comparethetotalcostofyoureducationtothetotalbenefitsofyoureducation.
b.comparethetotalcostofyoureducationtothebenefitsofstayingonemoresemester.
c.comparethecostofstayingonemoresemestertothebenefitsofstayingonemoresemester.
d.comparethetotalbenefitsofyoureducationtothecostofstayingonemoresemester.
110.Kyleisplanningtotakearoadtrip.Afterhemakeshisplans,hehastomakesomeunexpectedautorepairs.Also,heseesthepriceofgashasgoneup.Which of these two events shouldKyle consider in deciding if it is stillworthwhiletogoonthetrip?
a.theunexpectedrepairsandtheincreaseinthepriceofgas
b.theunexpectedincreaseforrepairs,butnottheincreaseinthepriceofgas
c.theincreaseinthepriceofgas,butnottheunexpectedrepairs
d.neithertheunexpectedincreaseinthepriceofgasnortheunexpectedrepairs
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