Each Question below is a multiple choice question. This is a practice Quiz for my upcoming test and I waned to know the correct answers for each one to help me prepare for my upcoming test. help is much appreciated!

1. Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles. These consumers would be exemplifying the economic idea that

people respond to economic incentives.

optimal decisions are made at the margin.

people are rational.

equity is more important than efficiency.

2.

Extra Hours Open	Total Revenue (dollars)
1	$70
2	120
3	160
4	178
5	200
6	210

Santiago runs a comic book store in the town of East Arbor. He is debating whether he should extend his hours of operation. Santiago figures that his sales revenue will depend on the number of extra hours the store is open as shown in the table above. He would have to hire a worker for those extra hours at a wage rate of $18 per hour.

Refer to Table 1-3. Using marginal analysis, by how many hours should Santiago extend his store's hours of operations?

3 hours

4 hours

5 hours

2 hours

3. Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. Should Allison continue to offer the 3-color pinstripe application?

a.

yes, she still makes a profit by selling the 3-color application

b.

More information is needed for Allison to make this decision.

c.

yes, but only if she lowers the price of the 1-color application

d.

no, her marginal benefit is less than her marginal cost

4. Which of the following questions or statements regarding medical school is normative?

a.

Medical students who enter specialized fields make a larger contribution to society than do student who enter primary care.

b.

What role does tuition play in a student's decision about whether to attend medical school?

c.

Have tuition increases had a large effect or a small effect on the number of applications to medical school?

d.

How do changes in expected future incomes affect the decisions of medical students about which specialty to choose?

5. Figure 2.4:

Figure 2-6 Hammers (thousands) 35 29 A 23 B D 10 C 0 22 30 4045 Wrenches (thousands)\fFigure 2-10 Tahiti Bora Bora Honey Honey (gallons) (gallons) 540 480 0 O 400 Milk 360 Milk (gallons) (gallons)Figure 3-1 Price A B D2 Demand, D1 0 QuantityPrice $50 S 25 15 0 10 20 50 75 100 Quantity