Costs and Multiple-choice Questions

1245 Words Oct 3rd, 2013 5 Pages
Chapter 2
Multiple-Choice Questions

1. An individual’s value for a good or service is the:

B. The amount of money he or she is willing to pay.

2. The biggest advantage of capitalism is that:

D. It creates wealth by letting a person follow his or her own self-interest.

3. Wealth-creating transactions are more likely to occur:

D. all of the above

4. Government regulation:

A. provides incentives to conduct business in an illegal black market.

5. An example of a price floor is:

A. Minimum wages.

6. A price ceiling:

B. is an implicit tax on producers and an implicit subsidy to consumers.

7. Taxes:

D. all of the above

8. A consumer values a car at $30,000 and it cost a producer $20,000 to make the
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7- The fixed-cost fallacy occurs when :

D) both A and C

8- MR. D’s Barbeque of Pickwick, TN produces 10,000 dry-rubbed rib slabs per year. Annually MR. D’s fixed costs are $50,000. The average variable cost per slab is a constant $2. The average total cost per slab then is :

A) $7.

9- All the following are examples of variable cost, except :

C) Accounting fees

10- The U.S government bought 112,000 acres of land in Southeastern Colorado in 1968 for $17,500,000. The cost of using this land today exclusively for the reintroduction of the black-tailed prairie dog:

D) is equal to the total dollar value the land would yield if used for farming and ranching.

Individual Problems Ch.3
3-1 By attending the Bruce Springsteen concert you are losing the personal gratification of attending a U2 concert.
3-2 The total cost of attending the concert is $225 because if you were to sell the ticket that’s how much it would be worth.
3-3 They are using the sunk cost fallacy, what they original paid for the house should not be relevant to the current selling price.
3-4 The sooner the seller gets its money the faster he/she can reinvest it.
3-5 Additional hidden cost could include:
Liquor license, Freight for delivery of new products, cost of glasses to serve wine
3-6 The decision to drop should not be affected by