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1. Kara was out jogging and despite being tired, decided to run one more mile. Based on her actions, economists would conclude that Kara: A. must be an avid runner. B. decided that the marginal benefit of running one more mile would outweigh the cost of the additional mile. C. decided that the marginal cost of running one more mile would outweigh the benefit of the additional mile. D. was not very tired, so the marginal cost of the extra mile was very low. Option B: Economists compare marginal benefits and marginal costs in order to make decisions. Here, Kara decided to run one more mile because the benefit she would gain (muscle strengthening, increasing endurance, cutting her mile time, etc.) was greater than the sacrifice of a few more minutes and becoming a little more tired. --------------------------------------------------------------------------------------------------------------------- 2. Refer to the budget line shown in the diagram above. If the consumer's money income is $20, which of the following combinations of goods is unattainable? A. 4 units of C, and 6 units of D. B. 5 units of C, and no units of D. C. 1 unit of C, and 8 units of D. D. 2 units of C, and 6 units of D. Option A: If you were to draw dots on this graph at each of the coordinates (4,6), (5,0), (1,8) and (2, 6), you would notice that coordinate (4,6) sits outside the curve. The other three points sit inside the curve, making them attainable, (the consumer is able to purchase the respective quantities within his/her $20 budget). Since point (4,6) is outside the curve, it is unattainable, or the consumer is unable to purchase 4 units of C and 6 units of D with his/her $20 budget. ... View Full Document

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