Managerial economics weeks 1-6
Get a hint
Which of the following is the best example of opportunity cost?
Select one:
a. a company's expenditures on a training program for its employees
b. the rate of return on a company's investment
c. the amount of money that a company can earn by depositing excess funds in a money market fund
d. the profit that a company forgoes when it decides to drop one product line in favor of another one -
ANS d. the profit that a company forgoes when it decides to drop one product line in favor of another
one
Opportunity cost is best defined as
Select one:
a. the amount given up when choosing one activity over all other alternatives.
b. the amount given up when choosing one activity over the next best alternative.
c. the opportunity to earn a profit that is greater than the one currently being made.
d. the amount that is given up when choosing an activity that is not as good as the next best alternative.
- ANS b. the amount given up when choosing one activity over the next best alternative.
The best definition of economics is
Select one:
a. how choices are made under conditions of scarcity.
b. how money is used.
c. how goods and services are produced.
d. how businesses maximize profits. - ANS a. how choices are made under conditions of scarcity.
,The economic concept of "opportunity cost" is most closely associated with which of the following
management considerations?
Select one:
a. market structure
b. resource scarcity
c. product demand
d. technology - ANS b. resource scarcity
Suppose you play a round of golf costing $75. The golf takes four hours to play. If you were not playing
golf you could be working and earning $40 per hour. The opportunity cost of your golf game is:
Select one:
a. 75
b. 235
c. 155
d. 160 - ANS d. 160
Suppose you paid $300 to take an economics course, which meets 30 times for one hour a class, during
the course of the semester. Instead of attending class, you could have either work as a cleaner for $5 an
hour or waited tables for $8 an hour. Given this information, the opportunity cost of attending each
class session is:
Select one:
a. 30
b. 8
c. 5
d. 13 - ANS b. 8
Suppose you find £20. If you choose to use the £20 to go to a football match, your opportunity cost of
going to the game is:
, Select one:
a. nothing, because you found the money.
b. £20 (because you could have used the £20 to buy other things) plus the value of your time spent at
the game.
c. £20 (because you could have used the £20 to buy other things) plus the value of your time spent at
the game, plus the cost of the dinner you purchased at the game.
d. £20 (because you could have used the €20 to buy other things). - ANS b. £20 (because you could have
used the £20 to buy other things) plus the value of your time spent at the game.
Currently, you work for 40 hours per week for a wage of £20 an hour. Your free hours are defined as the
number of hours per week not spent working, which in this case is (24 hours x 7 days) - 40 hours = 128
hours per week. Suppose now that your wage rate has increased by 25%. If you are happy to keep your
total weekly income constant, then:
Select one:
a. Your total number of working hours per week will fall by 25%.
b. Your total number of working hours per week will be 30 hours.
c. Your total number of free hours per week will increase by 25%
d. Your total number of free hours per week will increase by 6.25%. - ANS d. Your total number of free
hours per week will increase by 6.25%.
1. You have two choices for how you are going to spend Saturday evening. You can go to the pub with
your friends, which will cost you £30 for the evening. The pleasure you anticipate from this experience is
worth £50 to you. Or you can go to the theatre. The ticket will cost you £50, but you value the
experience at £60. Based on this information, which of the following statements is correct?
Select one:
a. The economic cost of going to the pub is £40.
b. The opportunity cost of an evening at the pub is £60.
Get a hint
Which of the following is the best example of opportunity cost?
Select one:
a. a company's expenditures on a training program for its employees
b. the rate of return on a company's investment
c. the amount of money that a company can earn by depositing excess funds in a money market fund
d. the profit that a company forgoes when it decides to drop one product line in favor of another one -
ANS d. the profit that a company forgoes when it decides to drop one product line in favor of another
one
Opportunity cost is best defined as
Select one:
a. the amount given up when choosing one activity over all other alternatives.
b. the amount given up when choosing one activity over the next best alternative.
c. the opportunity to earn a profit that is greater than the one currently being made.
d. the amount that is given up when choosing an activity that is not as good as the next best alternative.
- ANS b. the amount given up when choosing one activity over the next best alternative.
The best definition of economics is
Select one:
a. how choices are made under conditions of scarcity.
b. how money is used.
c. how goods and services are produced.
d. how businesses maximize profits. - ANS a. how choices are made under conditions of scarcity.
,The economic concept of "opportunity cost" is most closely associated with which of the following
management considerations?
Select one:
a. market structure
b. resource scarcity
c. product demand
d. technology - ANS b. resource scarcity
Suppose you play a round of golf costing $75. The golf takes four hours to play. If you were not playing
golf you could be working and earning $40 per hour. The opportunity cost of your golf game is:
Select one:
a. 75
b. 235
c. 155
d. 160 - ANS d. 160
Suppose you paid $300 to take an economics course, which meets 30 times for one hour a class, during
the course of the semester. Instead of attending class, you could have either work as a cleaner for $5 an
hour or waited tables for $8 an hour. Given this information, the opportunity cost of attending each
class session is:
Select one:
a. 30
b. 8
c. 5
d. 13 - ANS b. 8
Suppose you find £20. If you choose to use the £20 to go to a football match, your opportunity cost of
going to the game is:
, Select one:
a. nothing, because you found the money.
b. £20 (because you could have used the £20 to buy other things) plus the value of your time spent at
the game.
c. £20 (because you could have used the £20 to buy other things) plus the value of your time spent at
the game, plus the cost of the dinner you purchased at the game.
d. £20 (because you could have used the €20 to buy other things). - ANS b. £20 (because you could have
used the £20 to buy other things) plus the value of your time spent at the game.
Currently, you work for 40 hours per week for a wage of £20 an hour. Your free hours are defined as the
number of hours per week not spent working, which in this case is (24 hours x 7 days) - 40 hours = 128
hours per week. Suppose now that your wage rate has increased by 25%. If you are happy to keep your
total weekly income constant, then:
Select one:
a. Your total number of working hours per week will fall by 25%.
b. Your total number of working hours per week will be 30 hours.
c. Your total number of free hours per week will increase by 25%
d. Your total number of free hours per week will increase by 6.25%. - ANS d. Your total number of free
hours per week will increase by 6.25%.
1. You have two choices for how you are going to spend Saturday evening. You can go to the pub with
your friends, which will cost you £30 for the evening. The pleasure you anticipate from this experience is
worth £50 to you. Or you can go to the theatre. The ticket will cost you £50, but you value the
experience at £60. Based on this information, which of the following statements is correct?
Select one:
a. The economic cost of going to the pub is £40.
b. The opportunity cost of an evening at the pub is £60.
