Question 8

Bill is restoring a car and has already spent $4000 on the restoration. He expects to be able to sell the car for $5800. Bill discovers that he needs to do an additional $2400 of work to make the car worth $5800 to potential buyers. He could also sell the car now, without completing the additional work, for $3800. What should he do?

Question 8 options:

a)	He should sell the car now for $3800.

b)	He should keep the car since it wouldn't be rational to spend $6400 restoring a car and then sell it for only $5800.

c)	He should complete the additional work and sell the car for $5800.

d)	It does not matter which action he takes since the outcome will be the same either way.

Question 9

Production is efficient if the economy is producing at a point

Question 9 options:

a)	on the production possibilities frontier.

b)	outside the production possibilities frontier.

c)	on or inside the production possibilities frontier.

d)	inside the production possibilities frontier.

Question 10

The marginal benefit Claire gets from purchasing a third pair of flip-flops is

Question 10 options:

a)	the same as the total benefit of purchasing three pairs of flip-flops.

b)	more than the marginal cost of purchasing the third pair of flip-flops.

c)	the total benefit Claire gets from purchasing three pairs of flip-flops minus the total benefit she gets from purchasing two pairs of flip-flops.

d)	the total benefit Claire gets from purchasing four pairs of flip-flops minus the total benefit she gets from purchasing three pairs of flip-flops.

Question 11

Which of the following areas of study typifies macroeconomics as opposed to microeconomics?

Question 11 options:

a)	the effects of rent control on the availability of housing in New York City

b)	the economic impact of tornadoes on cities and towns in Oklahoma

c)	how tariffs on shoes affects the shoe industry

d)	the effect on the economy of changes in the nation's unemployment rate

Question 12

It is possible for an economy to increase its production of both goods if the economy

Question 12 options:

a)	moves downward and to the right along its production possibilities frontier and the frontier is bowed outward.

b)	moves upward and to the left along its production possibilities frontier and the frontier is bowed outward.

c)	moves in either direction along its production possibilities frontier and the frontier is a straight line.

d)	moves from a situation of inefficient production to a situation of efficient production.

Question 13

In the circular-flow diagram, which of the following items flows from households to firms through the markets for the factors of production?

Question 13 options:

a)	goods and services

b)	land, labor, and capital

c)	dollars spent on goods and services

d)	wages, rent, and profit

Question 14

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