, TESTBANK FOR Macroeconomics, 9th edition
Glenn Hubbard
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Macroeconomics, 9e (Hubbard)
Chapter 1 Economics: Foundations and Models
1.1 Three Key Economic Ideas
1) The CHIPS and Science Act of 2022 included $53 billion in federal government assistance to private
firms willing to construct new semiconductor factories in the United States or to expand existing
factories. Several companies, including Intel and GlobalFoundries indicated they would take advantage
of the assistance and build new factories in the United States. This is an example of these U.S.
manufacturing firms reacting to which of the three key economic ideas?
A) Firms attempt to maximize revenues.
B) Optimal decisions are made at the margin.
C) Firms are allocatively efficient.
D) People respond to economic incentives.
Answer: D
Diff: 2
Topic: Scarcity
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: Chapter Opener: Should Apple Manufacture the iPhone in the United States?
2) The study of economics arises due to
A) money.
B) scarcity.
C) greed.
D) resources.
Answer: B
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
3) Scarcity refers to the situation in which
A) unlimited wants exceed limited resources.
B) unlimited resources exceed limited wants.
C) a countryʹs population is larger than its resource base.
D) a nationʹs poverty level increases faster than its population.
Answer: A
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
1
Copyright © 2025 Pearson Education, Inc.
,4) The basic economic problem of scarcity
A) has always existed and will continue to exist.
B) will eventually disappear as technology continues to advance.
C) is a problem only in developing economies.
D) does not apply to the wealthy in society.
Answer: A
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
5) Economics is the study of the ________ people make to attain their goals, given their ________
resources.
A) purchases; unlimited
B) choices; scarce
C) income; available
D) decisions; household
Answer: B
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
6) What is an economic model?
A) It is a description of an economic issue that includes all possible related information.
B) It is a description of an economic issue based on official government information.
C) It is a detailed version of some aspect of economic life used to analyze an economic issue.
D) It is a simplified version of some aspect of economic life used to analyze an economic issue.
Answer: D
Diff: 1
Topic: Economic Models
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
2
Copyright © 2025 Pearson Education, Inc.
,7) The term ʺmarketʺ in economics refers to
A) a place where money changes hands.
B) a legal institution where exchange can take place.
C) a group of buyers and sellers of a product and the arrangement by which they come together to trade.
D) an organization which sells goods and services.
Answer: C
Diff: 1
Topic: Markets
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
8) Economists assume that
A) individuals behave in unpredictable ways.
B) consumer behavior is explained by the existence of unlimited resources.
C) people put other peopleʹs interests ahead of their own.
D) optimal decisions are made at the margin.
Answer: D
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
9) Which of the following best describes an assumption economists make about human behavior?
A) They assume that individuals act rationally all the time in all circumstances.
B) They assume that rational behavior is useful in explaining choices people make even though people
may not behave rationally all the time.
C) They assume that people take into account the question of fairness in all decisions they make.
D) They assume that individuals act randomly.
Answer: B
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
3
Copyright © 2025 Pearson Education, Inc.
,10) Economists assume that rational people
A) never use all available information as they act to achieve their goals.
B) undertake activities that benefit others and hurt themselves.
C) only weigh the benefits and costs of the most desirable alternative actions.
D) respond to economic incentives.
Answer: D
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
11) Your roommate, Serafina, a psychology major, said, ʺThe problem with economics is that it assumes
that consumers and firms always make the correct decision. But we know that everyoneʹs human, and we
all make mistakes.ʺ Do you agree with her comment?
A) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people
make incorrect choices in many situations.
B) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that
economic agents behave rationally, meaning they make the best decisions given their knowledge of the
costs and benefits.
C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more
reliable predictions.
D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine
the moral implications of these decisions.
Answer: B
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
4
Copyright © 2025 Pearson Education, Inc.
,12) Consider the following statements:
a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak
vendors along Waikiki beach.
b. Department stores take steps to increase security since they believe it is more costly to allow
shoplifting than to install expensive security monitoring equipment.
c. Farmers produce more cotton when its selling price falls.
Which of the above statements demonstrates that economic agents respond to incentives?
A) a only
B) b only
C) c only
D) a and b
Answer: D
Diff: 3
Topic: People Respond to Economic Incentives
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
13) In the first six months of 2003, branches of Commerce Bank in New York City were robbed 14 times.
The New York City Police recommended steps the bank could take to deter robberies, including the
installation of plastic barriers called ʺbandit barriers.ʺ The police were surprised the bank did not take
their advice. According to a deputy commissioner of police, ʺCommerce does very little of what we
recommend. Theyʹve told our detectives they have no interest in ever putting in the barriers.ʺ
It would seem that Commerce Bank would have a strong incentive to install ʺbandit barriersʺ to deter
robberies. Why wouldnʹt they do it?
A) The banks would rather delay installation of any theft deterring equipment in anticipation of new,
lower-cost innovations in the security devices market.
B) The banks must have weighed the cost of installing bandit barriers against the benefits and decided
that they have ʺno interest in ever putting in the barriers.ʺ
C) The banks are concerned that ʺbandit barriersʺ would send the wrong message to customers—that the
bank is unsafe.
D) The banks probably resent any interference from the police department.
Answer: B
Diff: 2
Topic: People Respond to Economic Incentives
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
5
Copyright © 2025 Pearson Education, Inc.
,14) Leaders in the pharmaceutical industry have asked the Biden administration for tax breaks and
subsidies for U.S. drug manufacturers to assist in domestic expansion. Assuming that executives at these
pharmaceutical firms use all available information when making the decision of whether or not to take
advantage of any tax breaks or subsidies to expand their production facilities, including any costs that
would be involved in making these moves, exemplifies which key economic idea?
A) People are rational.
B) People respond to economic incentives.
C) Optimal decisions are made at the margin.
D) The market system relies on the principle of voluntary exchange.
Answer: A
Diff: 1
Topic: People Are Rational
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: An Inside Look: Will Bidenʹs Strategy Expand the U.S. Biotechnology Industry?
15) Leaders in the pharmaceutical industry have asked the Biden administration for tax breaks and
subsidies for U.S. drug manufacturers to assist in domestic expansion. Expanding manufacturing in the
United States to take advantage of tax breaks and subsidies exemplifies which key economic idea?
A) People are rational.
B) People respond to economic incentives.
C) Optimal decisions are made at the margin.
D) The market system relies on the principle of voluntary exchange.
Answer: B
Diff: 1
Topic: People Respond to Economic Incentives
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: An Inside Look: Will Bidenʹs Strategy Expand the U.S. Biotechnology Industry?
16) In 2022, President Biden announced plans to reduce student loan debt. While the intention of these
plans was to reduce the burden on people who currently have student loans, some economists believe
that not having to pay back all that was borrowed would give students the incentive to
A) borrow more money because now they will expect to have to pay back less than they borrow.
B) completely stop paying back their student loans.
C) stop taking out any student loans.
D) borrow less than they had initially planned.
Answer: A
Diff: 1
Topic: People Respond to Economic Incentives
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: Apply the Concept: Will Changes to the Federal Student Loan Program Unintentionally
Give Colleges an Incentive to Increase Tuition?
6
Copyright © 2025 Pearson Education, Inc.
,17) In 2022, President Biden announced plans to reduce student loan debt. While the intention of these
plans was to reduce the burden on people who currently have student loans, Professor Sylvain Catherine
at the Wharton School argues that students not having to pay back all that was borrowed would give
colleges the incentive to
A) stop issuing scholarships.
B) no longer accept Pell Grants.
C) reduce enrollment.
D) further increase tuition.
Answer: D
Diff: 1
Topic: People Respond to Economic Incentives
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: Apply the Concept: Will Changes to the Federal Student Loan Program Unintentionally
Give Colleges an Incentive to Increase Tuition?
18) What does the term ʺmarginalʺ mean in economics?
A) the edge of a market
B) an additional or extra
C) illegal
D) secondary
Answer: B
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
19) An office supply store sells a ream of printer paper at a fixed price of $4.50. Which of the following is a
term used by economists to describe the money received from the sale of an additional ream of paper?
A) marginal revenue
B) gross earnings
C) pure profit
D) marginal costs
Answer: A
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
7
Copyright © 2025 Pearson Education, Inc.
, 20) Economics promotes which of the following as the way to make the best decision?
A) Continue an enjoyable activity as long as you do not have to pay for it.
B) Continue an enjoyable activity until it is no longer enjoyable.
C) Continue an enjoyable activity until you cannot afford to pursue it.
D) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.
Answer: D
Diff: 2
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
21) ________ involves undertaking an activity until its marginal benefits equal marginal costs.
A) Scarcity reduction
B) Central planning
C) Marginal analysis
D) Market intervention
Answer: C
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
22) The revenue received from the sale of an additional unit of a product
A) is a marginal benefit to the firm.
B) is called profit.
C) is called gross sales.
D) is called a net gain.
Answer: A
Diff: 2
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
8
Copyright © 2025 Pearson Education, Inc.
Glenn Hubbard
Notes
1- The file is chapter after chapter.
2- We have shown you few pages sample.
3- The file contains all Appendix and Excel sheet
if it exists.
4- We have all what you need, we make update
at every time. There are many new editions
waiting you.
5- If you think you purchased the wrong file You
can contact us at every time, we can replace it
with true one.
Our email:
,Macroeconomics, 9e (Hubbard)
Chapter 1 Economics: Foundations and Models
1.1 Three Key Economic Ideas
1) The CHIPS and Science Act of 2022 included $53 billion in federal government assistance to private
firms willing to construct new semiconductor factories in the United States or to expand existing
factories. Several companies, including Intel and GlobalFoundries indicated they would take advantage
of the assistance and build new factories in the United States. This is an example of these U.S.
manufacturing firms reacting to which of the three key economic ideas?
A) Firms attempt to maximize revenues.
B) Optimal decisions are made at the margin.
C) Firms are allocatively efficient.
D) People respond to economic incentives.
Answer: D
Diff: 2
Topic: Scarcity
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: Chapter Opener: Should Apple Manufacture the iPhone in the United States?
2) The study of economics arises due to
A) money.
B) scarcity.
C) greed.
D) resources.
Answer: B
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
3) Scarcity refers to the situation in which
A) unlimited wants exceed limited resources.
B) unlimited resources exceed limited wants.
C) a countryʹs population is larger than its resource base.
D) a nationʹs poverty level increases faster than its population.
Answer: A
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
1
Copyright © 2025 Pearson Education, Inc.
,4) The basic economic problem of scarcity
A) has always existed and will continue to exist.
B) will eventually disappear as technology continues to advance.
C) is a problem only in developing economies.
D) does not apply to the wealthy in society.
Answer: A
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
5) Economics is the study of the ________ people make to attain their goals, given their ________
resources.
A) purchases; unlimited
B) choices; scarce
C) income; available
D) decisions; household
Answer: B
Diff: 1
Topic: Scarcity
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
6) What is an economic model?
A) It is a description of an economic issue that includes all possible related information.
B) It is a description of an economic issue based on official government information.
C) It is a detailed version of some aspect of economic life used to analyze an economic issue.
D) It is a simplified version of some aspect of economic life used to analyze an economic issue.
Answer: D
Diff: 1
Topic: Economic Models
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
2
Copyright © 2025 Pearson Education, Inc.
,7) The term ʺmarketʺ in economics refers to
A) a place where money changes hands.
B) a legal institution where exchange can take place.
C) a group of buyers and sellers of a product and the arrangement by which they come together to trade.
D) an organization which sells goods and services.
Answer: C
Diff: 1
Topic: Markets
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
8) Economists assume that
A) individuals behave in unpredictable ways.
B) consumer behavior is explained by the existence of unlimited resources.
C) people put other peopleʹs interests ahead of their own.
D) optimal decisions are made at the margin.
Answer: D
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
9) Which of the following best describes an assumption economists make about human behavior?
A) They assume that individuals act rationally all the time in all circumstances.
B) They assume that rational behavior is useful in explaining choices people make even though people
may not behave rationally all the time.
C) They assume that people take into account the question of fairness in all decisions they make.
D) They assume that individuals act randomly.
Answer: B
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
3
Copyright © 2025 Pearson Education, Inc.
,10) Economists assume that rational people
A) never use all available information as they act to achieve their goals.
B) undertake activities that benefit others and hurt themselves.
C) only weigh the benefits and costs of the most desirable alternative actions.
D) respond to economic incentives.
Answer: D
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
11) Your roommate, Serafina, a psychology major, said, ʺThe problem with economics is that it assumes
that consumers and firms always make the correct decision. But we know that everyoneʹs human, and we
all make mistakes.ʺ Do you agree with her comment?
A) Yes, I agree with her. One cannot make predictions about economic behavior because in reality people
make incorrect choices in many situations.
B) I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that
economic agents behave rationally, meaning they make the best decisions given their knowledge of the
costs and benefits.
C) Yes, I agree with her. Economic theory should allow for irrational behavior so that we can have more
reliable predictions.
D) I disagree with her. If we cannot assume that decisions are correct, then we will not be able to examine
the moral implications of these decisions.
Answer: B
Diff: 2
Topic: People Are Rational
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
4
Copyright © 2025 Pearson Education, Inc.
,12) Consider the following statements:
a. Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak
vendors along Waikiki beach.
b. Department stores take steps to increase security since they believe it is more costly to allow
shoplifting than to install expensive security monitoring equipment.
c. Farmers produce more cotton when its selling price falls.
Which of the above statements demonstrates that economic agents respond to incentives?
A) a only
B) b only
C) c only
D) a and b
Answer: D
Diff: 3
Topic: People Respond to Economic Incentives
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
13) In the first six months of 2003, branches of Commerce Bank in New York City were robbed 14 times.
The New York City Police recommended steps the bank could take to deter robberies, including the
installation of plastic barriers called ʺbandit barriers.ʺ The police were surprised the bank did not take
their advice. According to a deputy commissioner of police, ʺCommerce does very little of what we
recommend. Theyʹve told our detectives they have no interest in ever putting in the barriers.ʺ
It would seem that Commerce Bank would have a strong incentive to install ʺbandit barriersʺ to deter
robberies. Why wouldnʹt they do it?
A) The banks would rather delay installation of any theft deterring equipment in anticipation of new,
lower-cost innovations in the security devices market.
B) The banks must have weighed the cost of installing bandit barriers against the benefits and decided
that they have ʺno interest in ever putting in the barriers.ʺ
C) The banks are concerned that ʺbandit barriersʺ would send the wrong message to customers—that the
bank is unsafe.
D) The banks probably resent any interference from the police department.
Answer: B
Diff: 2
Topic: People Respond to Economic Incentives
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
5
Copyright © 2025 Pearson Education, Inc.
,14) Leaders in the pharmaceutical industry have asked the Biden administration for tax breaks and
subsidies for U.S. drug manufacturers to assist in domestic expansion. Assuming that executives at these
pharmaceutical firms use all available information when making the decision of whether or not to take
advantage of any tax breaks or subsidies to expand their production facilities, including any costs that
would be involved in making these moves, exemplifies which key economic idea?
A) People are rational.
B) People respond to economic incentives.
C) Optimal decisions are made at the margin.
D) The market system relies on the principle of voluntary exchange.
Answer: A
Diff: 1
Topic: People Are Rational
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: An Inside Look: Will Bidenʹs Strategy Expand the U.S. Biotechnology Industry?
15) Leaders in the pharmaceutical industry have asked the Biden administration for tax breaks and
subsidies for U.S. drug manufacturers to assist in domestic expansion. Expanding manufacturing in the
United States to take advantage of tax breaks and subsidies exemplifies which key economic idea?
A) People are rational.
B) People respond to economic incentives.
C) Optimal decisions are made at the margin.
D) The market system relies on the principle of voluntary exchange.
Answer: B
Diff: 1
Topic: People Respond to Economic Incentives
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: An Inside Look: Will Bidenʹs Strategy Expand the U.S. Biotechnology Industry?
16) In 2022, President Biden announced plans to reduce student loan debt. While the intention of these
plans was to reduce the burden on people who currently have student loans, some economists believe
that not having to pay back all that was borrowed would give students the incentive to
A) borrow more money because now they will expect to have to pay back less than they borrow.
B) completely stop paying back their student loans.
C) stop taking out any student loans.
D) borrow less than they had initially planned.
Answer: A
Diff: 1
Topic: People Respond to Economic Incentives
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: Apply the Concept: Will Changes to the Federal Student Loan Program Unintentionally
Give Colleges an Incentive to Increase Tuition?
6
Copyright © 2025 Pearson Education, Inc.
,17) In 2022, President Biden announced plans to reduce student loan debt. While the intention of these
plans was to reduce the burden on people who currently have student loans, Professor Sylvain Catherine
at the Wharton School argues that students not having to pay back all that was borrowed would give
colleges the incentive to
A) stop issuing scholarships.
B) no longer accept Pell Grants.
C) reduce enrollment.
D) further increase tuition.
Answer: D
Diff: 1
Topic: People Respond to Economic Incentives
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
Special Feature: Apply the Concept: Will Changes to the Federal Student Loan Program Unintentionally
Give Colleges an Incentive to Increase Tuition?
18) What does the term ʺmarginalʺ mean in economics?
A) the edge of a market
B) an additional or extra
C) illegal
D) secondary
Answer: B
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
19) An office supply store sells a ream of printer paper at a fixed price of $4.50. Which of the following is a
term used by economists to describe the money received from the sale of an additional ream of paper?
A) marginal revenue
B) gross earnings
C) pure profit
D) marginal costs
Answer: A
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
7
Copyright © 2025 Pearson Education, Inc.
, 20) Economics promotes which of the following as the way to make the best decision?
A) Continue an enjoyable activity as long as you do not have to pay for it.
B) Continue an enjoyable activity until it is no longer enjoyable.
C) Continue an enjoyable activity until you cannot afford to pursue it.
D) Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.
Answer: D
Diff: 2
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
21) ________ involves undertaking an activity until its marginal benefits equal marginal costs.
A) Scarcity reduction
B) Central planning
C) Marginal analysis
D) Market intervention
Answer: C
Diff: 1
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
22) The revenue received from the sale of an additional unit of a product
A) is a marginal benefit to the firm.
B) is called profit.
C) is called gross sales.
D) is called a net gain.
Answer: A
Diff: 2
Topic: Optimal Decisions Are Made at the Margin
*: Recurring
Learning Outcome: Micro-1: Identify the basic principles of economics and explain how to think like an
economist
AACSB: Analytical thinking
8
Copyright © 2025 Pearson Education, Inc.
