(Multiple-choices are possible.

1.) What is opportunity cost?

A) Cost of my second choice
B) Cost of my next best alternative
C) Total cost of my alternative choices
*D) A & B

2) What is Marginal Cost?

A) cost of my second choice
*B) additional cost of the use or consumption of another Good or Service
C) cost of a good or service
D) cost of my first choice

3) I bought a cup of Starbucks coffee for $1.50.

I decided to have another cup. What was my cost?
A) My opportunity cost was $1.50
*B) My Marginal Cost was $1.50
C) There was no marginal or opportunity cost

4) Amount of personal satifisfaction or pleasure

one gets from consuming a good or service.
*A) Utility
B) Marginal Utility
C) Marginal costs
D) Negative Utility

5) The additional benefit of the use/comsumption

of an additonal good or service
*A) Marginal benefit
B) Marginal cost
C) Utility

6) The additional costs or the use/consumption of an Good or Service

A) Marginal benefit (MB)
*B) Marginal cost (MC)
C) Negative Utility

7) According to the economic decision rule,

you should continue to do an action/activity or make a purchase
A) if MC>MB
*B) if MB>MC
C) if MU<NU

8) What is the maximization of marginal benefit and marginal cost?

*A) MB=MC
B) MB>MC
C) MB=0

9) How many hours should this person spend studying economics?

A) 1
B) 2
*C) 3
D) 4

10) Based on the table below, what is the opportunity cost to Picnicland
of increasing the production of hotdogs from 450 to 900?
A) 150 burgers
*B) 225 burgers
C) 300 burgers
D) 450 burgers

11) Which of the following is the best definition of the word "marginal?"
*A) Additional
B) Abstract
C) Econometric
D) Complicated

12) A deep-sea diver can sell each pearl he retrieves for $20 in the seaside
market.
However, each time he dives in search of a pearl,
it is harder to find than the one he found before.
The table below describes the cost (in time and effort) of retrieving each
successive pearl.
At what number of pearls harvested should the diver stop diving for more pearls?
*3 pearls

13) According to the theory of consumer behavior,

which of the following decreases first as additional
units of a product are consumed?
A) Total utility
B) Average utility
*C) Marginal utility
D) Marginal physical product
E) Total physical product

14) When total utility is at its maximum, marginal utility is

A) increasing
B) negative
C) *equal to zero
D) at a maximum
E) at minimum

15) A student spends three hours and $20 at the movies the night before an exam.
What is the opportunity cost?
* The opportunity cost is time spent studying and that money to spend on something
else.

16) A farmer chooses to plant wheat.

What is the opportunity cost?
* the opportunity cost is planting a different crop, or an alternate use of the
resources (land and farm equipment).
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17) If India has to reduce the production of cotton by 2 lakh bales in order to
raise
the production of wheat by 1 lakh tons, then what is the opportunity cost of wheat?
A) 1 cotton = 2 wheats
B) 1 weaht = 1 cotton
C) 2 weaht = 1 cotton
D) 1 weaht = 2 cottons

A student spends three hours and $20 at the movies the night before an exam. The
opportunity cost is time spent studying and that money to spend on something else.
A farmer chooses to plant wheat; the opportunity cost is planting a different crop,
or an alternate use of the resources (land and farm equipment).
A commuter takes the train to work instead of driving. It takes 70 minutes on the
train, while driving takes 40 minutes. The opportunity cost is an hour spent
elsewhere each day.

What Is Marginal Analysis?

Marginal analysis is an examination of the additional benefits of an activity
compared to the additional costs incurred by that same activity
Marginal analysis can be applied to both individual and firm decision making. For
firms, profit maximization is achieved by weighing marginal revenue versus marginal
cost. For individuals, utility maximization is achieved by weighing the marginal
benefit versus marginal cost. Note, however, that in both contexts the decision
maker is performing an incremental form of cost-benefit analysis.