Question : 91.Supposethecostofflyinga200-seatplaneforanairlineis$100,000andthereare10emptyseatsonaflight.Theairlineshouldsellatickettoastandbypassengeronlyifthepassengeriswillingtopay a.morethan$200. : 1261333

 

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.

 

 

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