Question :
91.Supposethecostofflyinga200-seatplaneforanairlineis$100,000andthereare10emptyseatsonaflight.Theairlineshouldsellatickettoastandbypassengeronlyifthepassengeriswillingtopay
a.morethan$200.
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91.Supposethecostofflyinga200-seatplaneforanairlineis$100,000andthereare10emptyseatsonaflight.Theairlineshouldsellatickettoastandbypassengeronlyifthepassengeriswillingtopay
a.morethan$200.
b.morethan$300.
c.morethan$500.
d.Thiscannotbedeterminedfromtheinformationgiven.
92.Stephenisrestoringacarandhasalreadyspent$4,000ontherestoration.Heexpectstobeabletosellthecarfor$5,800. Stephen discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?
a.Heshouldsellthecarnowfor$3,800.
b.Heshouldkeepthecarsinceitwouldn’tberationaltospend$6,400restoringacarandthensellitforonly$5,800.
c.Heshouldcompletetheadditionalworkandsellthecarfor$5,800.
d.Itdoesnotmatterwhichactionhetakessincetheoutcomewillbethesameeitherway.
93.Billisrestoringacarandhasalreadyspent$4,000ontherestoration.Heexpectstobeabletosellthecarfor$6,200. Bill discovers that he needs to do an additional $2,400 of work to make the car worth $6,200 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?
a.Heshouldsellthecarnowfor$3,800.
b.Heshouldkeepthecarsinceitwouldn’tberationaltospend$6,400restoringacarandthensellitforonly$6,200.
c.Heshouldcompletetheadditionalworkandsellthecarfor$6,200.
d.ItdoesnotmatterifBillsellsthecarnoworcompletestheworkandthensellsitatthehigherpricebecausetheoutcomewillbethesameeitherway.
94.Coleisrefinishinganantiquechinacabinetandhasalreadyspent$180ontherestoration.Heexpectstobeabletosellthecabinetfor$360.Colediscoversthatheneedstodoanadditional$200worthofworktomakethecabinetworth$360topotentialbuyers.Hecouldalsosellthecabinetnow,withoutcompletingtheadditionalwork,for$100.WhatshouldColedo?
a.Heshouldsellthecabinetnowfor$100.
b.Heshouldkeepthecabinetsinceitwouldn’tberationaltospend$380restoringacabinetandthensellitforonly$360.
c.Heshouldcompletetheadditionalworkandsellthecabinetfor$360.
d.Itdoesnotmatterwhichactionhetakessincetheoutcomewillbethesameeitherway.
95.Katieisplanningtosellherhouse,andsheisconsideringmakingtwoupgradestothehousebeforelistingitforsale.Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000. Katie expects the new carpeting to increase the value of her house by $3,000 and the new roof to increase the value of her house by $7,000.
a.Sheshouldmakebothimprovementstoherhouse.
b.Sheshouldreplacethecarpetingbutnotreplacetheroof.
c.Sheshouldreplacetheroofbutnotreplacethecarpeting.
d.Sheshouldnotmakeeitherimprovementtoherhouse.
96.Bridgetdrinksthreesodasduringaparticularday.Themarginalbenefitsheenjoysfromdrinkingthethirdsoda
a.canbethoughtofasthetotalbenefitBridgetenjoysbydrinkingthreesodasminusthetotalbenefitshewouldhaveenjoyedbydrinkingjusttwosodas.
b.determinesBridget’swillingnesstopayforthethirdsoda.
c.islikelydifferentfromthemarginalbenefitprovidedtoBridgetbythesecondsoda.
d.Alloftheabovearecorrect.
97.Aconstructioncompanyhasbuilt30housessofarthisyearatatotalcosttothecompanyof$7.5million.Ifthecompany builds a 31sthouse,itstotalcostwillincreaseto$7.76million.Whichofthefollowingstatementsiscorrect?
a.Forthefirst30houses,theaveragecostperhousewas$250,000.
b.Themarginalcostofthe31sthouse,ifitisbuilt,willbe$260,000.
c.Ifthecompanycanexperienceamarginalbenefitof$275,000bybuildingthe31sthouse,thenthecompanyshouldbuildit.
d.Alloftheabovearecorrect.
98.AcmeHomeBuilders,Inc.,hasbuilt24housessofarthisyearatatotalcosttothecompanyof$4.80million.Ifthecompany builds a 25thhouse,itstotalcostwillincreaseto$5.05million.Whichofthefollowingstatementsiscorrect?
a.Forthefirst24houses,theaveragecostperhousewas$205,000.
b.Themarginalcostofthe25thhouse,ifitisbuilt,willequal$250,000.
c.Ifthecompanycansellthe25thhouse forat least$202,000, thenit shouldbuildit.
d.Alloftheabovearecorrect.
99.Itcostsafurniturecompany$8,750toproduce25tables.Thecompany’stotalcostwillbe$9,125ifitproducesa26thtable.Ifthecompanyproduces26tables,then
a.itsaveragecostisgreaterthanitsmarginalcost.
b.itsaveragecostanditsmarginalcostareequal.
c.itsaveragecostislessthanitsmarginalcost.
d.Thiscannotbedeterminedfromtheinformationgiven.
100.Supposethecostofoperatinga100roomhotelforanightis$10,000andthereare5emptyroomsfortonight.Ifthemarginalcostofoperatingoneroomforonenightis$30andacustomeriswillingtopay$60forthenight,thehotelmanagershould
a.renttheroombecausethemarginalbenefitexceedsthemarginalcost.
b.renttheroombecausethemarginalbenefitexceedstheaveragecost.
c.notrenttheroombecausethemarginalbenefitislessthanthemarginalcost.
d.notrenttheroombecausethemarginalbenefitislessthantheaveragecost.