Question : 31) Instead of studying for an additional two hours for : 1240993

31) Instead of studying for an additional two hours for the economics final, Leann decides to watch a movie. Leann is making

A) a decision that does not involve an opportunity cost.

B) a rational decision if her marginal cost from the movie is greater than her marginal benefit.

C) a rational decision if her marginal benefit from the movie is greater than her marginal cost.

D) an irrational decision because studying is more important than watching a movie.

E) a decision that is not on the margin because she will see the entire movie.

32) When Gabriel made a rational choice to spend his entire allowance on candy bars, he did so by comparing the

A) benefits of the candy bars to the desires he had for the candy bars.

B) marginal benefits of the candy bars to the marginal costs of the candy bars.

C) opportunity costs of the candy bars to the scarcity of the candy bars.

D) benefits of the candy bars to the scarcity candy bars.

E) self-interest to the social interest.

33) As part of its proposal to win the 2012 Olympics, London developed a carbon offset plan to reduce the Games’ impact on the environment. In 2011, the organizers decided to drop this plan to reduce emissions. We can conclude that

A) the marginal cost of reducing emissions exceeded the marginal benefits of reducing emissions.

B) the organizers are not making a rational decision.

C) the organizers are ignoring a sunk cost.

D) there are no incentives to reduce carbon emissions.

E) it is difficult to calculate the cost of reducing emissions.

34) Going skiing will cost Adam $80 a day. He also loses $40 per day in wages because he has to take time off from work. Adam still decides to go skiing.

A) His decision is rational if Adam’s marginal benefit of spending a day skiing is greater than his marginal cost.

B) The $80 price of skiing is not an opportunity cost and so did not affect Adam’s decision.

C) He loses a total of $120 per day, so his decision is irrational.

D) Adam’s lost $40 per day in wages is not an opportunity cost and so did not affect his decision.

E) Adam is definitely making a decision that is in the social interest.

35) The decision to go to graduate school is a rational one for a college student if the

A) cost is not too great.

B) marginal cost exceeds the marginal benefit of graduate school.

C) marginal benefit of graduate school exceeds the marginal cost.

D) opportunity cost of graduate school equals zero.

E) student carefully compared the social benefits of this decision.

36) An incentive is

A) an inducement to take a particular action.

B) the marginal cost of some course of action.

C) the marginal benefit of some course of action.

D) the net gain of some course of action.

E) a constraint that society imposes on those who make self-interested choices.

37) An incentive is

A) a reward or a penalty that encourages or discourages an action.

B) when people make rational choices by comparing costs and benefits.

C) what you must give up to get something.

D) a choice is made on the margin.

E) a good or service that satisfies wants.

38) A change in a marginal benefit or cost will

A) increase consumption.

B) decrease production.

C) cause an individual to make a rational choice.

D) increase sunk costs.

E) change incentives.

39) Proponents of cuts in income tax rates argue that when income tax rates are cut, workers have an incentive to increase their work hours. This argument is based on the assumption that

A) workers are irrational.

B) workers make decisions based on the marginal benefit of each hour worked compared to the marginal cost of work.

C) the opportunity cost of working is negative.

D) the marginal cost of each additional work hour is not important to most workers.

E) workers make decisions based on the social interest.

40) Your economics professor offers 10 points extra credit if you attend a review session before your next exam. This extra credit is an example of

A) a decrease in marginal benefit to attend the review session.

B) an increase in marginal cost to attend the review session.

C) a rational choice.

D) an incentive to attend the review session.

E) None of the above answers is correct.