Practice Questions
Click any question to see detailed solutions
In the context of economic efficiency, which of the following scenarios best illustrates the concept of finding optimal choices?
When a firm produces where marginal cost equals marginal revenue, it means they are maximizing their profit. Other options are incorrect because Incre...
In the context of economic efficiency, what does the concept of marginal benefit refer to when making optimal choices?
Marginal benefit means the extra happiness or satisfaction you get from using one more item. Other options are incorrect because This option confuses ...
In a situation where an investor must choose between two investment options, one with a guaranteed return but low yield and another with a high potential yield but significant risk of loss, how should the investor assess which option is optimal?
The best choice is to weigh the possible gains against the risks. Other options are incorrect because Some might think it's safest to pick the guarant...
In the context of making optimal economic choices, which scenario best illustrates the relationship between opportunity cost, marginal benefit, and risk assessment?
This choice shows how people weigh the benefits of investing in stocks against the risk of losing money. Other options are incorrect because This opti...
In a market characterized by uncertainty, how should a firm assess the risk of entering a new market to achieve optimal choice and equilibrium?
A firm should look at both the market conditions and the risks involved. Other options are incorrect because This option suggests only looking at past...
What is the opportunity cost of choosing to spend time studying for an economics exam instead of working a part-time job?
The opportunity cost is what you give up when you make a choice. Other options are incorrect because Some might think the knowledge gained is the cost...
What is the primary consideration when making a decision at the margin in economics?
When making choices, we look at the extra benefit we get from a decision. Other options are incorrect because Some might think total cost matters most...
In a market where a company is trying to determine its production level, if the marginal cost of producing an additional unit is lower than the price it can sell that unit for, what should the company do to maximize profit?
If it costs less to make one more item than what you can sell it for, you should make more. Other options are incorrect because Some might think reduc...
If choosing the optimal production level is to maximizing profit as selecting the best route is to minimizing travel time, then what is the key factor that must be considered in both scenarios?
Opportunity costs are what you give up when you make a choice. Other options are incorrect because Some might think benefits alone matter; People migh...
In a scenario where a company’s total revenue begins to decrease after a certain level of output, what should the company consider in deciding whether to reduce production?
The best production level is where the company makes the most money. Other options are incorrect because It's a common mistake to think cutting back a...
What is the correct sequence of steps to determine the optimal output level where total revenue exceeds total cost?
First, you find total revenue, which is the money you earn. Other options are incorrect because This option starts with profit, but you need to know r...
In the context of finding optimal choices, what is the primary factor that determines the most beneficial level of output?
The best level of output is when the money made from selling products is greater than the money spent to make them. Other options are incorrect becaus...
A company is analyzing its output levels and finds that at 100 units produced, their total revenue is $1,000 and total cost is $800. At 150 units produced, total revenue is $1,200 and total cost is $1,500. Which classification correctly identifies the optimal output level based on the relationship between total revenue and total cost?
At 100 units, the company makes a profit of $200. Other options are incorrect because Some might think more units always mean more profit; This option...
If a company's total revenue begins to exceed its total cost at a certain level of output, what underlying factor contributes to this effect?
When more people want to buy a product, the company sells more. Other options are incorrect because Some might think that just lowering costs will hel...
A local bakery produces two types of pastries: croissants and muffins. During a particular week, the bakery notices that the total revenue from croissants is consistently higher than the total cost of producing them, while muffins have a lower total revenue than their production cost. Given that the bakery wants to maximize its profits, which strategy should the owner adopt based on the principles of finding optimal choices in economics?
The owner should look closely at costs and earnings for both pastries. Other options are incorrect because Focusing only on croissants might seem smar...
Which of the following statements correctly describe how to find the optimal choice in terms of total revenue and total cost? Select all that apply.
The optimal choice is found where the extra revenue from selling one more unit equals the extra cost of making that unit. Other options are incorrect ...
In the context of finding optimal choices in economics, the point at which total revenue exceeds total cost the most significantly is referred to as the point of _____.
Maximum Profit is where a business makes the most money. Other options are incorrect because At the break-even point, a business makes no profit or lo...
Master Finding Optimal Choices
Ready to take your understanding to the next level? Access personalized practice sessions, progress tracking, and advanced learning tools.