Question : 31) Refer to Scenario 1-1. Had the firm not produced : 1266833

31) Refer to Scenario 1-1. Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and if so by how much?

A) Its profit will be $6,700 higher.

B) Its profit will be $700 higher.

C) Its profit will be $700 lower.

D) Its profit will be $6,000 lower.

Table 1-1

Hours

Open

Total

Revenue

(dollars)

1

$50

2

  75

3

  95

4

110

5

120

6

125

Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.

32) Refer to Table 1-1. Using marginal analysis, determine how many hours should Lydia extend her nail salon’s hours of operations?

A) 2 hours

B) 3 hours

C) 4 hours

D) 5 hours

E) 6 hours

33) Refer to Table 1-1.  What is Lydia’s marginal benefit if she decides to stay open for two hours instead of one hour?

A) $25

B) $50

C) $75

D) $125

34) Refer to Table 1-1. What is Lydia’s marginal cost if she decides to stay open for two hours instead of one hour?

A) $10

B) $20

C) $25

D) $40

35) Soo Jin shares a one-bedroom apartment with her classmate. Her share of the rent is $700 per month. She is considering moving to a studio apartment which she will not have to share with anyone. The studio apartment rents for $950 per month. Recently, you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment.  Soo Jin is as rational as any other person. As an economics major, you rightly conclude that

A) Soo Jin did not have a choice; her roommate was a slob.

B) Soo Jin figures that the additional benefit of having her own place (as opposed to sharing) is at least $250.

C) Soo Jin figures that the benefit of having her own place (as opposed to sharing) is at least $950.

D) the cost of having one’s own space outweighs the benefits.

36) If the marginal cost of keeping a doctor’s office open one additional hour per day is $200, then the doctor should keep the office open for one extra hour

A) only if the marginal benefit she receives is greater than $200 plus an acceptable profit margin.

B) as long as the marginal benefit she receives is just equal to or greater than $200.

C) as long as the marginal cost does not rise.

D) until the marginal benefit she receives reaches zero.

37) Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

38) Scarcity is a problem that will eventually disappear as technology advances.

39) An economic model is a simplified version of reality used to analyze real-world economic situations.

40) The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal benefit.