Quiz 11. If one fails to account for implicit costs in decision making, then applying the cost-benefit rule will be flawedbecause- the benefits will be overstated- the costs will be understated- the benefits will be understated- the costs will be overstated2. Jen pays 1$ to rent beach umbrella, 9$ for food & drinks & 10$ for transport. Best alternative: she does not go tothe beach; go to the movies; ticket + refreshments & transport = 20$. The implicit cost of going to the beach is- the 20$ spent on umbrella, food & drinks, & transport- the 20$ she will spend going to the movie- the value she places on watching the movie- the value she places on watching the movie + the 20$ spent on umbrella, food & drinks, & transport3. Refer to MB & MC graph. Which of the following statements is false?- Total economic surplus is maximised when society deploys Q0 quantity of resources - Society is presently allocating Q1 quantity of resources. TES will increase & deadweight loss will decrease if societyreduces allocation of resources- Society is presently allocating Q1 quantity of resources. TES will increase & deadweight loss will decrease if societyincreases allocation of resources- Society is presently allocating Q2 quantity of resources. TES will increase & deadweight loss will decrease if societyreduces allocation of resources4. Refer to MB & MC graph. Which of the following statements is true?- The shape of MB curve is due to the law of increasing opportunity costs- The shape of MC curve is due to the law of diminishing marginal utility &/or the law of diminishing returns- Society will not experience scarcity if it maximises total economic surplus by allocating Q0 quantity of resources- There is no deadweight loss if society allocates Q0 quantity of resources 5. Based on economic theory & attached diagram, the approach used to determine optimal quality of resources toallocate to crime control & prevention & law enforcement in society is primarily based on- the Scarcity Principle- the Cost-benefit Principle- the Law of Increasing Opportunity Costs- the Law of Diminishing Returns6. Chris is deciding on 1 of 3 alternatives: (a). work on an essay that is due soon; (b). work at a restaurant to earnadditional income to pay for university tuition; (c). swimming training. Chris’ situation is an example of- ignoring sunk cost in economic decision-making- the pitfall of ignoring implicit costs in economic analysis- the Scarcity Principle- normative economic analysis7. Which of the following statements about the Incentive Principle is untrue?- Entities are more likely to act when the benefits associated with that course of action increases- Entities are less likely to act when the costs associated with that course of action increases- Entities are more likely to act when the benefits associated with that course of action decreases- Entities are more likely to act when the costs associated with that course of action decreases8. Microeconomics is distinguished from macroeconomic mainly by its emphasis on the following topic- Scarcity Principle- Cost-benefit Principle- Pricing & output of goods & services in individual markets- Total output of goods & services produced by all producers9. A person should be allowed to attend school even if the marginal cost to society of educating that person is higherthan the marginal benefit of educating that person. This is an application of positive economic analysis.- True10. If marginal benefit is higher than marginal cost, there will be no deadweight losses & economic surplus is notmaximised.-