Question : 11) Which of the following scenarios describes an action that : 1240378

11) Which of the following scenarios describes an action that is NOT rational from an economic point of view?

A) After drinking one martini (shaken, not stirred), James buys and drinks a second martini even though the marginal benefit of the second martini is lower than the marginal benefit of the first.

B) Eric buys a replacement ticket to the basketball game after he realizes that he accidentally left his original ticket at home.

C) Emily chooses to attend a social event on Tuesday night instead of studying even though she has an important exam on Wednesday morning.

D) US Airways sells a last minute ticket to Don for $50 even though its average cost per passenger is $250.

E) None of the above

12) Because resources are scarce, economists would say that

A) the best things in life are always free.

B) people’s wants are unlimited.

C) every choice has an opportunity cost.

D) anything worth doing is worth doing well.

E) there are no benefits from cooperation.

13) Wichita is building a convention center and financing it with revenues raised from a city hotel tax.  Local politicians assert that the convention center is essentially free for Wichita residents because out-of-town visitors are paying for it. Someone who is practicing the economic way of thinking would disagree because

A) they believe that Wichita does not need a new convention center.

B) there are other projects that could be undertaken with the tax funds.

C) the convention center may not pass a marginal cost-benefit test.

D) the hotel tax may lead to a decline in visits to Wichita.

E) the hotel tax may reduce commercial property values in the area.

14) Suppose that your public library charges a fixed monthly membership fee of $12.  Members are allowed to check out as many books as they want under this plan.  The average member checks out 4 books per month.   Suppose that your public library changes its policy.  Now each book costs $3 to check out but there is no longer a monthly membership fee.  What effect do you think the new policy will have on the total number of books checked out from your library each month?  The new policy is likely to ______the number of booked checked out because ________.

A) leave unchanged; members have already shown that they are willing to pay $12 to check out 4 books per month

B) leave unchanged; the average cost of the library service is the same under both plans

C) reduce; the marginal benefit of checking out books is now lower under the new policy

D) reduce; the marginal cost of checking out books is now higher under the new policy

E) increase; the average benefit of checking out more than 4 books is now higher under the new policy

15) In New York City, when he was the mayor Michael Bloomberg recommend that the city, with the help of private donors, make cash payments to poor and underprivileged parents who can certify that their children are attending school on a regular basis. The payments would start after third grade and go through high school, rising each year as dropout rates get higher and a child’s forgone earning potential is higher. What economic concept does this policy represent?

A) public goods

B) technological progress

C) externalities

D) the “invisible hand”

E) incentives

16) Nathan drinks three cups of coffee per day. The marginal benefit that he enjoys from drinking the third cup is

A) less than the marginal benefit that he receives from drinking the second cup.

B) the same as the total benefit from drinking all three cups minus the total benefit of drinking the first two cups.

C) both A and B.

D) greater than the marginal benefit that he receives from drinking the second cup.

E) none of the above.