3. How many cooks should you hire to maximize your net benefit?
A. 1
B. 3
C. 4
D. 5
Your classmates from the University of Chicago are planning to go to Miami for spring break, and you are
undecided about whether you should go with them. The round-trip airfares are $600, but you have a frequent-
flyer coupon worth $500 that you could use to pay part of the airfare. All other costs for the vacation are exactly
$900. The most you would be willing to pay for the trip is $1400. Your only alternative use for your frequent-
flyer coupon is for your trip to Atlanta two weeks after the break to attend your sister's graduation, which your
parents are forcing you to attend. The Chicago-Atlanta round-trip airfares are $450.
4. If the Chicago-Atlanta round-trip air fare is $350, should you go to Miami?
A. No, there is a loss of $50.
B. No, there is a loss of $100.
C. Yes, there is economic surplus of $50.
D. Yes, there is economic surplus of $400.
5. If the marginal costs of 1, 2, and 3 hours of talking on the phone are $50, $75, and $105, then the total costs
are
A. $50, $150, and $315.
B. $50, $41.67, and $115.
C. $50, $125, and $230.
D. $50, $175, and $405.
6. Alex received a four-year scholarship to State U. that covered tuition and fees, room and board, and books
and supplies. As a result
A. attending State U. for four years is costless for Alex.
B. Alex has no incentive to work hard while at State U.
C. the cost of attending State U. is the amount of money Alex could have earned working for four years.