Costs and Multiple-choice Questions

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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…show more content…
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

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