7. Suppose you own a cell phone and you are trying to decide how much benefit you get from the cell phone. You could figure this out best from answering the following question: 1.How much did you pay for the cell phone? 2.How much is someone willing to pay you for the cell phone? 3.What is the most money you would have to be paid in order to get you to sell the cell phone? 4.What is the least money you would have to be paid in order to get you to sell the cell phone? 5.What are similar cell phones currently selling for? 8. Which of the following statements about a rational decision maker is/are true? 1.A rational decision maker is not a consistent decision maker. 2.A rational decision maker tries to minimize his or her expected economic surplus. 3.A rational decision maker does not consider sunk costs when calculating the expected marginal cost of an action. 4.A rational decision maker throws a die (single of ‘dice’) when faced with an important decision.5.All of the above are true. 9. Refer to Figure B: Based on this information, the rational decision would be to ____ because you would earn _____. 10. Refer to Figure B: Based on this information, the good decision would be to ____ because you would earn _____. 11. Refer to Figure B: Based on this information, the good decision for society would be for you to ____ because this will earn for society _____.
7 12. Suppose an economy contains only 4 consumers. If each of these consumers is willing to purchase 2 TVs when the price of a TV is $400, then: 1.The market demand curve is a vertical line going straight up from the 2 TV mark on the horizontal axis. 2.The market quantity of TV’s demanded when price is $400 is 8.3.The market quantity of TV’s demanded when price is $400 is 16.4.The market demand curve is a horizontal line going straight to the right from the $400 mark on the vertical axis. 5.The market equilibrium price of TVs will be $400. 13. Which of the following could lead to a market failure? 1.The producer of dog food is hiding from consumers the information that the dog food contains harmful pesticides. 2.Consumers consider ramen noodles to be an inferior good. 3.The income effect is larger than the substitution effect. 4.Hamburger exhibits diminishing marginal utility of consumption. 5.All of the above