Practice Questions
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In the context of marginal analysis, if a firm increases its production by one additional unit and finds that the marginal revenue generated from that unit is greater than the marginal cost, what should the firm do?
When the extra money made from selling one more unit is more than what it costs to make it, the firm should produce more. Other options are incorrect ...
How does an increase in consumer surplus impact market equilibrium in a competitive market?
When consumer surplus increases, it means more people want to buy at the current price. Other options are incorrect because Some might think that more...
In the context of marginal analysis, how does the concept of diminishing returns affect optimal decision-making in production?
Diminishing returns mean that as you add more resources, like workers or machines, each extra unit produces less than before. Other options are incorr...
In the context of marginal analysis, how should a firm decide whether to increase production? Consider the relationship between marginal revenue and cost-benefit analysis.
A firm should increase production when the extra money made from selling one more item (marginal revenue) is greater than the extra cost to make that ...
How does understanding marginal cost contribute to economic efficiency in decision-making regarding trade-offs?
Knowing marginal cost helps you weigh extra benefits against extra costs. Other options are incorrect because This answer confuses total cost with mar...
What is marginal utility in the context of consumer choice in economics?
Marginal utility is about the extra happiness you get from using one more item. Other options are incorrect because This answer confuses total happine...
In economics, marginal cost refers to the additional cost incurred when producing one more unit of a good. What happens to the marginal cost if the production level increases beyond the optimal point?
When production goes beyond the best level, it usually costs more to make each extra item. Other options are incorrect because Some might think costs ...
What does the concept of opportunity cost imply in marginal analysis when making economic decisions?
Opportunity cost means what you give up when you choose one option over another. Other options are incorrect because This answer confuses total costs ...
In marginal analysis, the additional benefits of an action are compared to its additional ______ to determine the best course of action.
Marginal analysis helps us decide if the benefits of doing something are worth the extra costs. Other options are incorrect because Some might think w...
If a student decides to review for the AP Microeconomics exam for eight sessions because the marginal benefits outweigh the costs, what is the underlying reason for this decision?
The student sees that each study session gives them more knowledge than the time it takes. Other options are incorrect because Some students think stu...
In a scenario where a student evaluates the marginal benefits of additional study sessions against the costs, which decision reflects a misunderstanding of marginal analysis?
Stopping study sessions when the benefits are still greater than the costs shows a misunderstanding. Other options are incorrect because This choice s...
If the marginal benefits of studying for an exam are to academic performance as the marginal costs are to time spent studying, what would the optimal decision be when the marginal benefits start to equal the marginal costs?
You should study until the benefits of studying equal the costs. Other options are incorrect because Some might think studying forever is best; Stoppi...
Order the steps in the marginal analysis process to evaluate the benefits of studying for the AP Microeconomics exam.
First, you need to find out what you gain from studying. Other options are incorrect because Some might think comparing costs comes first; Choosing to...
Which of the following scenarios best illustrates the concept of marginal analysis in making a decision about study sessions for the AP Microeconomics exam?
This choice shows how to weigh the extra benefit of studying against the time spent. Other options are incorrect because This option suggests studying...
Maria is preparing for her AP Microeconomics exam and is considering how many review sessions to schedule. She estimates that each session will provide her with a marginal benefit of 20 points to her knowledge, but each session will also cost her 2 hours of her time. If she has 16 hours available to review, how should Maria apply marginal analysis to optimize her study sessions?
Maria should schedule all 8 sessions. Other options are incorrect because This answer suggests Maria should limit her time too early; This option thin...
If a student evaluates that each additional study session increases their exam score by 5 points while costing 2 hours of time, what should they consider before deciding to study more?
The student should compare the extra points gained from studying to the time spent. Other options are incorrect because Focusing only on total time ca...
Which of the following statements accurately describe marginal analysis in the context of decision-making? Select all that apply.
Marginal analysis helps find the best choice when the extra benefit of something equals the extra cost. Other options are incorrect because This optio...
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