# Quiz 3: Marginal Analysis for Optimal Decisions

Business

Q 1Q 1

firm will maximize profit by producing that level of output at which
A) the additional revenue from the last unit sold exceeds the additional cost of the last unit by the largest amount.
B) the additional revenue from the last unit sold equals the additional cost of the last unit.
C) total revenue exceeds total cost by the largest amount.
D) total revenue equals total cost.
E) both b and c

Free

Multiple Choice

E

Q 2Q 2

function a decision maker seeks to maximize or minimize is the ________ function.
A) optimal
B) decision-making
C) objective
D) marginal
E) none of the above

Free

Multiple Choice

C

Q 3Q 3

Choice variables
A) determine the value of the objective function
B) determine the constraint
C) can only take on integer values
D) cannot be continuous
E) both c and d

Free

Multiple Choice

A

Q 4Q 4

an unconstrained maximization problem
A) the decision maker seeks to maximize net benefits.
B) the decision maker seeks to maximize total benefits.
C) the decision maker does not take cost into account because there is no constraint.
D) the decision maker does not take the objective function into account because there is no constraint.
E) none of the above

Free

Multiple Choice

Q 5Q 5

marginal cost is greater than marginal benefit at the current activity level, the decision maker can increase net benefit by decreasing the activity because
A) total benefit will rise by more than total cost will rise.
B) marginal cost is rising faster than marginal benefit is falling.
C) net benefit is upward sloping at this point.
D) total cost will fall by more than total benefit will fall.

Free

Multiple Choice

Q 6Q 6

a constrained minimization problem, the decision maker
A) is constrained by the specific amount of total benefits.
B) is constrained by the choice set of values for the activities.
C) seeks to minimize the cost of achieving a specific goal.
D) all of the above
E) none of the above

Free

Multiple Choice

Q 7Q 7

continuous choice variable
A) must be continuously varied to attain the goal.
B) can take on only special values between two end points.
C) is in unconstrained but not constrained problems.
D) all of the above
E) none of the above

Free

Multiple Choice

Q 8Q 8

Questions 8 through 10 refer to the following:
An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency decides to hire operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls).
-operators receive $25 an hour, how many operators should the agency hire?
A) 0
B) 1
C) 2
D) 3
E) 4

Free

Multiple Choice

Q 9Q 9

Questions 8 through 10 refer to the following:
An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency decides to hire operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls).
-operators receive $25 an hour, what is the minimum possible total cost of personal calls (per hour)?
A) $460
B) $255
C) $120
D) $ 85
E) none of the above

Free

Multiple Choice

Q 10Q 10

Questions 8 through 10 refer to the following:
An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency decides to hire operators to monitor calls in order to attain the optimal number of personal calls (minimize total cost of personal calls).
-is the most the agency would be willing to pay the first operator?
A) $480
B) $300
C) $240
D) $120
E) none of the above

Free

Multiple Choice

Q 11Q 11

Questions 11 through 13 refer to the following figure, which shows marginal benefits (MB) and marginal cost (MC) of activity A.
-the decision maker is choosing 200 units of activity A,
A) this level maximizes net benefits.
B) the activity could be reduced by one unit and net benefits will increase by $10.
C) the activity could be increased by one unit and net benefits will increase by $10.
D) the activity could be increased by one unit and net benefits will increase by $25.
E) the activity could be reduced by one unit and net benefits will increase by $15.

Free

Multiple Choice

Q 12Q 12

Questions 11 through 13 refer to the following figure, which shows marginal benefits (MB) and marginal cost (MC) of activity A.
-the decision maker is choosing 400 units of activity A,
A) this level maximizes net benefits.
B) the activity could be reduced by one unit and net benefits will increase by $10.
C) the activity could be reduced by one unit and net benefits will rise by $25.
D) the activity could be increased by one unit and net benefits will increase by $15.
E) the activity could be reduced by one unit and net benefits would decrease by $10.

Free

Multiple Choice

Q 13Q 13

Questions 11 through 13 refer to the following figure, which shows marginal benefits (MB) and marginal cost (MC) of activity A.
-the decision maker is choosing 300 units of activity A,
A) this level maximizes net benefits.
B) if the activity is increased by one unit, net benefits will increase by $20.
C) if the activity is decreased by one unit, net benefits will decrease by $20.
D) both b and c
E) all of the above

Free

Multiple Choice

Q 14Q 14

Questions 14 through 16 refer to the following:
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $40,000 while a market researcher receives $20,000. The marginal contribution of engineers and market researchers are:
-should a manager with an annual budget of $140,000, allocate this budget in order to maximize the number of new products developed?
A) Hire one engineer and five market researchers
B) Hire two engineers and three market researchers
C) Hire three engineers and one market researcher
D) Hire four engineers and four market researchers

Free

Multiple Choice

Q 15Q 15

Questions 14 through 16 refer to the following:
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $40,000 while a market researcher receives $20,000. The marginal contribution of engineers and market researchers are:
-the manager has an annual budget of $140,000 and currently is hiring two engineers and three market researchers, then
A) the last dollar spent on an engineer yielded more new products than the last dollar spent on a market researcher.
B) the last dollar spent on a market researcher yielded more new products than the last dollar spent on an engineer.
C) he is making the correct decision because engineers make more than market researchers.
D) he is making the correct decision because the last market researcher hired was more productive than the last engineer hired.

Free

Multiple Choice

Q 16Q 16

Questions 14 through 16 refer to the following:
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $40,000 while a market researcher receives $20,000. The marginal contribution of engineers and market researchers are:
-should a manager with an annual budget of $240,000, allocate this budget in order to maximize the number of new products developed?
A) Hire three engineers and four market researchers.
B) Hire three engineers and five market researchers.
C) Hire five engineers and two market researchers.
D) Hire four engineers and four market researchers.

Free

Multiple Choice

Q 17Q 17

decision rule for constrained optimization is to select the level for each activity at which
A) marginal benefit equals marginal cost for each activity.
B) total benefit equals total cost for each activity.
C) marginal benefit per dollar of marginal cost is equal across all activities.
D) total benefit per dollar of total cost is equal across all activities.

Free

Multiple Choice

Q 18Q 18

Questions 18 and 19 refer to the following:
A student taking economics, statistics, and finance has decided to spend 9 hours per week studying. The objective is to maximize the average grade, which means maximizing the total grade in the three courses. The table shows the student's estimate of the relation between time spent studying each course and the grade for each course.
-should the student allocate her time?
A) 3 hours economics, 4 hours statistics, 2 hours finance
B) 3 hours economics, 3 hours statistics, 3 hours finance
C) 4 hours economics, 3 hours statistics, 2 hours finance
D) 3 hours economics, 2 hours statistics, 4 hours finance
E) none of the above

Free

Multiple Choice

Q 19Q 19

Questions 18 and 19 refer to the following:
A student taking economics, statistics, and finance has decided to spend 9 hours per week studying. The objective is to maximize the average grade, which means maximizing the total grade in the three courses. The table shows the student's estimate of the relation between time spent studying each course and the grade for each course.
-is the maximum AVERAGE grade the student can earn if she studies 9 hours per week?
A) 80
B) 80.3
C) 82
D) 78.3
E) none of the above

Free

Multiple Choice

Q 20Q 20

For questions 20 and 21 using the following marginal benefit and marginal cost functions for activity A:
MB = 100 5A
MC = 20 + 3A
-optimal level of A is
A) 40
B) 30
C) 20
D) 10
E) 0

Free

Multiple Choice

Q 21Q 21

For questions 20 and 21 using the following marginal benefit and marginal cost functions for activity A:
MB = 100 5A
MC = 20 + 3A
-fifth unit of activity A will
A) increase net benefits by 75.
B) reduce net benefits by 35.
C) increase net benefits by 40.
D) decrease net benefits by 40.
E) reduce net benefits by 75.

Free

Multiple Choice

Q 22Q 22

order to minimize the net cost of pollution reduction, the level of pollution reduction (the amount of a pollutant not released into the environment) should be the level at which
A) the marginal benefit of reducing pollution exeeds the marginal cost of reducing pollution by the greatest possible amount.
B) the total benefit of reducing pollution equals the total cost of reducing pollution.
C) the marginal benefit of reducing pollution equals the marginal cost of reducing pollution.
D) the total cost of reducing pollution is minimized and the total benefits of reducing pollution are maximized.

Free

Multiple Choice

Q 23Q 23

the choice variable is a continuous variable, the decision rule for an unconstrained maximization problem is:
A) If MB > MC, increase the activity.
B) If MB < MC, decrease the activity.
C) Choose the activity so that MB = MC.
D) all of the above
E) none of the above

Free

Multiple Choice

Q 24Q 24

profits depend on both how much is produced (output) and on the level of advertising, then a profit-maximizing firm should choose the levels of output and advertising at which
A) the marginal revenue of output equals the marginal cost of output.
B) the addition to total revenue of the last unit of advertising equals the addition to total cost of the last unit of advertising.
C) total revenue equals total cost for both output and advertising.
D) both a and b
E) both b and c

Free

Multiple Choice

Q 25Q 25

consumes only Perrier and cheese. In order to maximize her happiness subject to a limited income, Gigi should purchase the amounts of Perrier and cheese at which
A) the addition to happiness of the last bottle of Perrier is the same as the addition to happiness of the last pound of cheese.
B) the addition to happiness per dollar spent on Perrier is the same as the addition to happiness per dollar spent on cheese.
C) she spends all her income.
D) both b and c
E) both a and c

Free

Multiple Choice

Q 26Q 26

firm is deciding whether or not to close down its plant and modernize by installing new technology. Which of the following should management ignore when making the decision?
A) How much the present plant cost
B) Cost of lost sales while the plant is closed
C) Added cost of the labor needed for the new plant
D) all of the above

Free

Multiple Choice

Q 27Q 27

making a decision about whether to increase its advertising budget the firm management should not consider
A) the added revenue from increased sales.
B) the added cost of producing more goods for sale.
C) interest payments on the firm's loan.
D) the cost of the increased advertising.
E) none of the above

Free

Multiple Choice

Q 28Q 28

Which of the following statements represents bad decision making?
A) I've already spent 3 years in the college so I can't drop out and go to work now.
B) I've already paid for the ticket so I might as well stay to the end.
C) I've put in so much time on this paper, I can't quit now.
D) My stock has dropped $10 a share so I can't afford to sell it now.
E) all of the above.

Free

Multiple Choice

Q 29Q 29

firm can maximize profit (net benefit) by choosing to produce that level of output at which
A) the difference between the additional revenue from the last unit sold and the additional cost of that unit is maximized.
B) the additional revenue from the last unit sold equals the additional cost of that unit.
C) the additional revenue from the last unit sold is just a little more than the additional cost of that unit.
D) total revenue equals total cost.
Questions 30 through 33 refer to the following:
A clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll. The last doctor hired treated 1,600 extra patients in a year, while the last nurse hired treated 1,000 extra patients in a year.

Free

Multiple Choice

Q 30Q 30

doctors make $40,000 a year, what do nurses make?
A) $25,000 a year
B) $20,000 a year
C) $15,000 a year
D) $10,000 a year

Free

Multiple Choice

Q 31Q 31

doctors make $50,000 a year and nurses make $40,000 a year, then
A) the clinic could serve more patients by hiring more doctors and fewer nurses.
B) the clinic could serve more patients by hiring fewer doctors and more nurses.
C) the clinic is making the correct decision.
D) the clinic is not making the correct decision because the additional patients per dollar spent on doctors is greater than the additional patients per dollar spent on nurses.
E) a and d

Free

Multiple Choice

Q 32Q 32

doctors make $64,000 a year and nurses make $40,000 a year, then
A) the clinic could serve more patients by hiring more doctors and fewer nurses.
B) the clinic could serve more patients by hiring fewer doctors and more nurses.
C) the clinic is making the correct decision.
D) the clinic is not making the correct decision because the additional patients per dollar spent on doctors is greater than the additional patients per dollar spent on nurses.
E) a and d

Free

Multiple Choice

Q 33Q 33

order to minimize the NET costs associated with crime,
A) steps must be taken to eliminate all crime.
B) crime should be reduced to the level at which the total benefit from crime equals the total cost of crime prevention.
C) crime should be reduced to the level at which the marginal cost from crime equals the marginal cost of crime prevention.
D) no crime should be eliminated.

Free

Multiple Choice

Q 34Q 34

optimization rule for unconstrained optimization is to select that level of activity at which
A) marginal benefit equals marginal cost.
B) total benefit is less than total cost.
C) total benefit is equal to total cost.
D) marginal benefit exceeds marginal cost.

Free

Multiple Choice

Q 35Q 35

Whenever the additional revenue from the last unit of output exceeds the additional cost of that unit, a profit-maximizing firm should
A) do nothing, the firm is making profits.
B) produce less in order to increase profits.
C) produce more in order to increase profits.
D) think about investing in another industry.

Free

Multiple Choice

Q 36Q 36

Questions 37 and 38 refer to the following:
A toy manufacturer is experiencing quality problems on its assembly line. Every defective toy that leaves the factory costs the firm $20. The firm has decided to hire quality inspectors to catch defective toys before they leave the factory.
-each inspector is paid $100 a day, how many inspectors should the firm hire to minimize the total cost of defective toys?
A) 3
B) 4
C) 5
D) 6

Free

Multiple Choice

Q 37Q 37

Questions 37 and 38 refer to the following:
A toy manufacturer is experiencing quality problems on its assembly line. Every defective toy that leaves the factory costs the firm $20. The firm has decided to hire quality inspectors to catch defective toys before they leave the factory.
-the cost of each defective toy rises to $50, while inspectors are paid $150 a day, how many inspectors should the firm hire?
A) 3
B) 4
C) 5
D) 6

Free

Multiple Choice

Q 38Q 38

Gonzo consumes only two things--coke and hot dogs. We can define the addition to "happiness" of consuming an additional coke as the marginal utility of coke and that for hot dogs as the marginal utility of hot dogs. The prices of coke and hot dogs are fixed and Gonzo has a limited budget. In order to maximize "happiness" subject to his limited budget, Gonzo should purchase coke and hot dogs so that
A) the marginal utility of coke is the same as the marginal utility of hot dogs.
B) he spends the same amount on coke as on hot dogs.
C) the addition to happiness of the last coke is the same as the addition to happiness of the last hot dog.
D) the addition to happiness per dollar spent on coke is the same as the addition to happiness per dollar spent on hot dogs.

Free

Multiple Choice

Q 39Q 39

Questions 40 and 41 refer to the following:
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $30,000 and that of a market researcher is $20,000. The marginal contribution of engineers and market researchers are
-the manager has an annual budget of $120,000, how should this budget be allocated in order to maximize the number of new products developed?
A) Hire two engineers and one market researcher.
B) Hire two engineers and three market researchers.
C) Hire three engineers and two market researchers.
D) Hire three engineers and four market researchers.

Free

Multiple Choice

Q 40Q 40

Questions 40 and 41 refer to the following:
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $30,000 and that of a market researcher is $20,000. The marginal contribution of engineers and market researchers are
-the manager currently has two engineers and one market researcher, what must be true?
A) He is making the correct decision because
B) He is not making the correct decision because
C) Fewer new products will be developed if he hires fewer engineers and more market researchers.
D) More new products will be developed if he hires fewer engineers and more market researchers.

Free

Multiple Choice

Q 41Q 41

clinic uses doctors and nurses to serve the maximum number of patients given a limited annual payroll. The clinic currently has 10 doctors and 30 nurses. The last doctor hired can serve 300 additional patients, while the last nurse hired can serve 200 additional patients. If doctors make $60,000 a year and nurses make $20,000 a year, the clinic
A) is making the correct hiring decision because doctors are more productive than nurses.
B) is making the correct hiring decision because doctors are paid more than nurses.
C) could serve more patients with the same payroll by hiring more doctors and fewer nurses.
D) could serve more patients with the same payroll by hiring more nurses and fewer doctors.

Free

Multiple Choice

Q 42Q 42

optimal level of pollution reduction is that level at which
A) the total benefits of pollution reduction exceeds the total cost of pollution reduction by the largest amount.
B) the total benefits of pollution reduction equal the total cost of pollution reduction.
C) the marginal benefit of pollution reduction exceeds the marginal cost of pollution reduction by the largest amount.
D) the additional benefit of the last unit of pollution reduction equals the additional cost of the last unit of pollution reduction.
E) both a and d

Free

Multiple Choice

Q 43Q 43

Blue Ribbon Committee has decided that the amount of acid rain should be reduced and is trying to determine the optimal level of reduction. There are benefits from reducing acid rain (reduced loss of wildlife and forest, better health, etc.), but there are also costs. The committee estimates that the marginal benefit of each unit of reduction is $1,400 5R, where R is units of reduction, and the marginal cost is 2R. If the committee wants to maximize the net benefit from reducing acid rain, what is marginal cost at the optimal level of reduction?
A) $ 10
B) $ 20
C) $100
D) $200

Free

Multiple Choice

Q 44Q 44

Blue Ribbon Committee has decided that the amount of acid rain should be reduced and is trying to determine the optimal level of reduction. There are benefits from reducing acid rain (reduced loss of wildlife and forest, better health, etc.), but there are also costs. The committee estimates that the marginal benefit of each unit of reduction is $700 5R, where R is units of reduction, and the marginal cost is 2R. If the committee wants to maximize the net benefit from reducing acid rain, what is the optimal level of pollution reduction?
A) 10
B) 20
C) 100
D) 200

Free

Multiple Choice

Q 45Q 45

profits depend on both how much is produced (output) and the level of quality, then a profit-maximizing firm should choose the levels of output and quality at which
A) The marginal revenue of output exceeds the marginal cost of output by the largest amount.
B) The marginal revenue of quality exceeds the marginal cost of quality by the largest amount.
C) The difference between the addition to total revenue and the addition to total cost of the last units of output and quality is the greatest.
D) both a and b
E) none of the above

Free

Multiple Choice

Q 46Q 46

Questions 47 and 48 refer to the following:
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $40,000, while a market researcher receives $20,000. The marginal contributions of engineers and market researchers are:
-should the manager with an annual budget of $160,000, allocate this budget in order to maximize the number of new products developed?
A) Hire 2 engineers and 1 market researcher.
B) Hire 3 engineers and 2 market researchers.
C) Hire 4 engineers and 3 market researchers.
D) Hire 4 engineers and 1 market researcher.

Free

Multiple Choice

Q 47Q 47

Questions 47 and 48 refer to the following:
A manager in charge of new product development can hire engineers and market researchers. The annual salary of an engineer is $40,000, while a market researcher receives $20,000. The marginal contributions of engineers and market researchers are:
-the manager currently hires four engineers and one market researcher, what must be true?
A) She is making the correct decision because .
B) More new products would be developed if she hires more engineers and fewer market researchers.
C) More new products would be developed if she hires fewer engineers and more market researchers.
D) She is not making the correct decision because

Free

Multiple Choice

Q 48Q 48

Questions 49 through 52 refer to the following:
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts.
-each security guard is paid $200 a week and the cost of a stolen radio is $25, how many security guards should the firm hire?
A) 1
B) 2
C) 3
D) 4
E) 5

Free

Multiple Choice

Q 49Q 49

Questions 49 through 52 refer to the following:
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts.
-the cost of a stolen radio is $25, what is the MOST the firm would be willing to pay to hire the first security guard?
A) $200
B) $250
C) $500
D) $750
E) none of the above

Free

Multiple Choice

Q 50Q 50

Questions 49 through 52 refer to the following:
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts.
-each security guard is paid $200 a week and the cost of a stolen radio is $50, how many security guards should the firm hire?
A) 1
B) 2
C) 3
D) 4
E) 5

Free

Multiple Choice

Q 51Q 51

Questions 49 through 52 refer to the following:
A radio manufacturer is experiencing theft problems at its warehouse and has decided to hire security guards to reduce the thefts. The firm wants to minimize the net cost of warehouse thefts.
-order to minimize the NET cost of theft, a firm should choose the level of theft prevention at which
A) theft is eliminated.
B) the marginal benefit of theft equals the marginal cost of the theft.
C) the total benefit of theft prevention equals the total cost of the theft prevention.
D) the marginal benefit of theft prevention equals the marginal cost of preventing theft.
E) the total cost of theft prevention equals the total cost of preventing theft.

Free

Multiple Choice

Q 52Q 52

Questions 53 through 55 refer to the following:
The manager of the customer service department at a bank can hire employees with a high school degree (HS) who earn $10,000 annually or employees with a bachelor's degree (B) who earn $20,000. The manager wants to maximize the number of customers served given a fixed payroll.
-the manager has a payroll of $80,000, how should the budget be allocated in order to maximize the number of customers served?
A) Hire two HS and three B.
B) Hire four HS and two B.
C) Hire one HS and two B.
D) Hire three HS and one B.
E) none of the above

Free

Multiple Choice

Q 53Q 53

Questions 53 through 55 refer to the following:
The manager of the customer service department at a bank can hire employees with a high school degree (HS) who earn $10,000 annually or employees with a bachelor's degree (B) who earn $20,000. The manager wants to maximize the number of customers served given a fixed payroll.
-the manager currently has three HS and three B, what must be true?
A) More customers could be served if the manager hires fewer HS and more B.
B) More customers could be served if the manager hires more HS and fewer B.
C) The manager is making the correct decision because the marginal contributions are proportionate.
D) The manager is not making the correct decision because

Free

Multiple Choice

Q 54Q 54

Questions 53 through 55 refer to the following:
The manager of the customer service department at a bank can hire employees with a high school degree (HS) who earn $10,000 annually or employees with a bachelor's degree (B) who earn $20,000. The manager wants to maximize the number of customers served given a fixed payroll.
-the manager's payroll is $120,000, what should be done to maximize the number of customers served?
A) Hire six HS and three B.
B) Hire five HS and five B.
C) Hire four HS and four B.
D) Hire two HS and five B.

Free

Multiple Choice

Q 55Q 55

Questions 56 through 58 refer to the following:
A government agency is having problems with personal telephone calls made during working hours. Because each minute of a personal call costs the agency $0.50 in wasted wages, it has decided to hire operators to monitor calls. The agency wants to hire the number of operators that will minimize the total cost of personal calls.
-operators receive $300 a week, how many operators should the agency hire?
A) 0
B) 1
C) 3
D) 5
E) none of the above

Free

Multiple Choice

Q 56Q 56

Questions 56 through 58 refer to the following:
A government agency is having problems with personal telephone calls made during working hours. Because each minute of a personal call costs the agency $0.50 in wasted wages, it has decided to hire operators to monitor calls. The agency wants to hire the number of operators that will minimize the total cost of personal calls.
-is the most the agency would be willing to pay the fifth operator?
A) $100
B) $200
C) $400
D) $500
E) none of the above

Free

Multiple Choice

Q 57Q 57

Questions 56 through 58 refer to the following:
A government agency is having problems with personal telephone calls made during working hours. Because each minute of a personal call costs the agency $0.50 in wasted wages, it has decided to hire operators to monitor calls. The agency wants to hire the number of operators that will minimize the total cost of personal calls.
-operators receive $400 a week, what is the lowest possible total cost of personal calls?
A) $ 650
B) $ 800
C) $1450
D) $1500
E) none of the above

Free

Multiple Choice

Q 58Q 58

optimal level of any activity is that level for which
A) total benefit exceeds total cost by the greatest amount.
B) marginal benefit exceeds marginal cost by the greatest possible amount.
C) both a and b
D) none of the above

Free

Multiple Choice

Q 59Q 59

Questions 60 through 62 refer to the following:
Dr. X, an assistant professor at a large state university, is trying to decide how to allocate the 50 hours a week she spends working among the various activities expected of an assistant professor. The professor wants to maximize her raise next year and the table shows her estimates of how time spent in each activity will contribute to her raise:
-should she allocate her time?
A) 20 hours research, 15 hours teaching, 15 hours service
B) 17 hours research, 17 hours teaching, 16 hours service
C) 18 hours research, 16 hours teaching, 16 hours service
D) 20 hours research, 16 hours teaching, 14 hours service
E) none of the above

Free

Multiple Choice

Q 60Q 60

Questions 60 through 62 refer to the following:
Dr. X, an assistant professor at a large state university, is trying to decide how to allocate the 50 hours a week she spends working among the various activities expected of an assistant professor. The professor wants to maximize her raise next year and the table shows her estimates of how time spent in each activity will contribute to her raise:
-is Dr. X's maximum possible raise if she works 50 hours?
A) $1495
B) $1600
C) $1845
D) $1860
E) none of the above

Free

Multiple Choice

Q 61Q 61

Questions 60 through 62 refer to the following:
Dr. X, an assistant professor at a large state university, is trying to decide how to allocate the 50 hours a week she spends working among the various activities expected of an assistant professor. The professor wants to maximize her raise next year and the table shows her estimates of how time spent in each activity will contribute to her raise:
-she decides that she will work 54 hours a week instead, how should she allocate her time?
A) 18 hours research, 18 hours teaching, 18 hours service
B) 21 hours research, 19 hours teaching, 14 hours service
C) 20 hours research, 17 hours teaching, 17 hours service
D) 20 hours research, 18 hours teaching, 16 hours service
E) none of the above

Free

Multiple Choice

Q 62Q 62

dentist's office, which wants to serve the maximum number of patients given a fixed payroll, currently has two dentists and four dental hygienists. Dentists earn $60,000 a year and hygienists earn $15,000 a year. If the office is hiring the optimal combination of dentists and hygienists, and the last dentist hired served 120 additional patients, how many patients will the last hygienist hired add?
A) 30
B) 60
C) 120
D) 240
E) 480

Free

Multiple Choice

Q 63Q 63

publishing house is using 400 printers and 200 printing presses to produce books. The printers' wage rate is $20 and the price of a printing press is $100. The last printer added 20 books to total output, while the last press added 50 books to total output. In order to maximize the number of books published with a budget of $28,000, the publishing house
A) should continue to use 400 printers and 200 presses.
B) should use more printers and fewer presses because printers cost less than presses.
C) should use more printers and fewer presses because the last dollar spent on a printer yielded more output than the last dollar spent on a press.
D) should use more presses and fewer printers because the marginal output of the last press was more than the marginal output of the last printer.
E) should use more presses and fewer printers because the last dollar spent on a press yielded more output than the last dollar spent on a printer.

Free

Multiple Choice

Q 64Q 64

Questions 65 through 67 refer to the following:
A housecleaning company receives $25 for each house cleaned. The table below gives the relation between the number of workers and the number of houses that can be cleaned per week.
-marginal revenue from the fourth worker is
A) $6.
B) $ 30.
C) $150.
D) $750
E) none of the above

Free

Multiple Choice

Q 65Q 65

Questions 65 through 67 refer to the following:
A housecleaning company receives $25 for each house cleaned. The table below gives the relation between the number of workers and the number of houses that can be cleaned per week.
-the company want to maximize profit and hires three workers, the wage rate of a housecleaner can be no more than
A) $175.
B) $200.
C) $225.
D) $600.
E) none of the above

Free

Multiple Choice

Q 66Q 66

Questions 65 through 67 refer to the following:
A housecleaning company receives $25 for each house cleaned. The table below gives the relation between the number of workers and the number of houses that can be cleaned per week.
-the wage rate of a housecleaner is $130, what is the maximum amount of profit the company can earn?
A) $ 20
B) $150
C) $230
D) $750
E) none of the above

Free

Multiple Choice

Q 67Q 67

restaurant currently has two cooks and ten waiters. Cooks earn $10 an hour and waiters earn $5 an hour. The last cook added 40 meals served to total output, while the last waiter added 25 meals served to total output. In order to maximize the number of meals served with a fixed budget, the manager should
A) continue to use two cooks and ten waiters because output is being maximized.
B) should use more cooks and fewer waiters because cooks are more productive than waiters.
C) should use more cooks and fewer waiters because productivity per dollar is higher for cooks than for waiters.
D) should use more waiters and fewer cooks because waiters are paid less than cooks.
E) should use more waiters and fewer cooks because productivity per dollar is higher for waiters than for cooks.

Free

Multiple Choice

Q 68Q 68

Questions 69 and 70 refer to the following:
Randolph is taking three courses this semester: economics, statistics, and finance. He has decided to spend 20 hours per week studying (in addition to attending all his classes) and his objective is to maximize his average grade, which means maximizing the total of his grades in the three courses. The table shows Randolph's estimate of the relation between time spend studying and his grade for each course.
-should Randolph allocate his time?
A) 7 hours economics, 7 hours statistics, 6 hours finance
B) 6 hours economics, 6 hours statistics, 8 hours finance
C) 7 hours economics, 6 hours statistics, 5 hours finance
D) 6 hours economics, 5 hours statistics, 7 hours finance
E) none of the above

Free

Multiple Choice

Q 69Q 69

Questions 69 and 70 refer to the following:
Randolph is taking three courses this semester: economics, statistics, and finance. He has decided to spend 20 hours per week studying (in addition to attending all his classes) and his objective is to maximize his average grade, which means maximizing the total of his grades in the three courses. The table shows Randolph's estimate of the relation between time spend studying and his grade for each course.
-is the maximum AVERAGE grade Randolph can earn if he studies 20 hours per week?
A) 80
B) 80.3
C) 82
D) 81.7
E) none of the above

Free

Multiple Choice

Q 70Q 70

package delivery service uses vans and employees to deliver the maximum number of packages given a fixed budget. The last van added 600 packages to total output, while the last employee added 500 packages. If vans cost $400 per week and employees earn $300 per week, the firm
A) could deliver more packages with the same budget by using more employees and fewer vans.
B) could deliver more packages with the same budget by using more vans and fewer employees.
C) should use more vans and fewer employees because the last dollar spent on vans added more to total output than the last dollar spent on employees.
D) is delivering the maximum number of packages given the fixed budget.
E) both b and c

Free

Multiple Choice

Q 71Q 71

Questions 72 and 73 refer to the following:
A grocery store hires cashiers and baggers. Cashiers earn $8 an hour; baggers earn $4 an hour. The manager, who wants to maximize the number of customers served given a fixed payroll, expects the following productivity from cashiers and baggers:
-a payroll of $32 (per hour), how should the manager allocate this budget?
A) Hire three cashiers and two baggers
B) Hire two cashiers and four baggers
C) Hire two cashiers and three baggers
D) Hire four cashiers and one bagger
E) none of the above

Free

Multiple Choice

Q 72Q 72

Questions 72 and 73 refer to the following:
A grocery store hires cashiers and baggers. Cashiers earn $8 an hour; baggers earn $4 an hour. The manager, who wants to maximize the number of customers served given a fixed payroll, expects the following productivity from cashiers and baggers:
-is the maximum possible number of customers that can be served with a payroll of $32?
A) 1208
B) 936
C) 864
D) 312
E) none of the above

Free

Multiple Choice

Q 73Q 73

the marginal benefits of increasing study time are less than the marginal costs, then
A) study time should be decreased to zero.
B) study time should be decreased.
C) no conclusion about the relative merits of more or less study time is possible.
D) there is too little study time.
E) study time should be increased.

Free

Multiple Choice

Q 74Q 74

Questions 75 through 77 refer to the following:
A restaurant hires cooks and waiters. Cooks earn $10 an hour; waiters earn $5 an hour. The manager, who wants to maximize the number of meals served given a fixed payroll of $45 per hour, expects the following from cooks and waiters:
-manager should hire
A) 2 cooks and 4 waiters.
B) 2 cooks and 5 waiters.
C) 3 cooks and 2 waiters.
D) 3 cooks and 4 waiters.
E) none of the above

Free

Multiple Choice

Q 75Q 75

Questions 75 through 77 refer to the following:
A restaurant hires cooks and waiters. Cooks earn $10 an hour; waiters earn $5 an hour. The manager, who wants to maximize the number of meals served given a fixed payroll of $45 per hour, expects the following from cooks and waiters:
-Given the fixed payroll, the maximum number of meals that can be served is
A) 240.
B) 670.
C) 850.
D) 1,130.
E) none of the above

Free

Multiple Choice

Q 76Q 76

Questions 75 through 77 refer to the following:
A restaurant hires cooks and waiters. Cooks earn $10 an hour; waiters earn $5 an hour. The manager, who wants to maximize the number of meals served given a fixed payroll of $45 per hour, expects the following from cooks and waiters:
-the optimal choice, the last dollar spent on hiring waiters yielded
A) 6 additional meals.
B) 16 additional meals.
B) 80 additional meals.
D) 60 additional meals.
E) none of the above

Free

Multiple Choice

Q 77Q 77

Questions 78 and 79 refer to the following:
A metal refining plant emits sulfur dioxide into the air and has decided to install air scrubbers to reduce the amount of pollution. Each scrubber costs $180,000 and the Environmental Protection Agency (EPA) fines the plant $5,000 for every part of pollution emitted per million.
-first air scrubber __________ (increases/decreases) the total cost of pollution by $______.
A) increases, $180,000
B) increases, $530,000
C) decreases, $ 70,000
C) decreases, $250,000
D) none of the above

Free

Multiple Choice

Q 78Q 78

Questions 78 and 79 refer to the following:
A metal refining plant emits sulfur dioxide into the air and has decided to install air scrubbers to reduce the amount of pollution. Each scrubber costs $180,000 and the Environmental Protection Agency (EPA) fines the plant $5,000 for every part of pollution emitted per million.
-many air scrubbers should the plant install in order to minimize the total cost of pollution?
A) 1
B) 2
C) 3
D) 4
E) 5

Free

Multiple Choice

Q 79Q 79

Questions 80 and 81 refer to the following:
A politician, who wants to receive the maximum number of votes, spends 9 hours a week speaking to various groups. The table below shows his estimates of how time spent with each group will affect the number of votes he receives:
-should the politician allocate his speaking time?
A) 3 hours to LPM, 3 hours to TM, 3 hours to LCL
B) 4 hours to LPM, 2 hours to TM, 3 hours to LCL
C) 5 hours to LPM, 1 hours to TM, 3 hours to LCL
D) 5 hours to LPM, 2 hours to TM, 2 hours to LCL
E) none of the above

Free

Multiple Choice

Q 80Q 80

Questions 80 and 81 refer to the following:
A politician, who wants to receive the maximum number of votes, spends 9 hours a week speaking to various groups. The table below shows his estimates of how time spent with each group will affect the number of votes he receives:
-many EXTRA votes will the politician receive if he devotes one more hour to speaking engagements (i.e., speaks 10 instead of 9 hours per week)?
A) 150
B) 180
C) 200
D) 380
E) none of the above

Free

Multiple Choice

Q 81Q 81

package delivery service currently has 12 vans and 16 employees. Vans cost $400 per week and employees earn $300 per week. The last van added 480 packages delivered to total output, while the last employee added 450 packages. The firm
A) is making the correct decision because the dollar expenditure ($4800) is equal for vans and employees.
B) should use more vans and fewer employees because the last van added 480 packages while the last employee only added 450 packages.
C) should use fewer vans and more employees because the last dollar spent on vans yielded 1.2 additional packages delivered, while the last dollar spent on employees yielded 1.5 packages delivered.
D) could deliver more packages for the same budget by using fewer vans and more employees.
E) both c and d

Free

Multiple Choice

Q 82Q 82

Questions 83 through 85 refer to the following:
Your firm sells club soda in both grocery stores and convenience stores. You have a budget of $550 for store displays, and must decide how to allocate this budget between grocery stores and convenience stores to maximize the total number of sales. The following table shows the total number of units that can be sold in grocery stores and convenience stores, according to the number of displays in each type of store. Displays in grocery stores cost $150 each and displays in convenience stores cost $100 each.
-maximize the total number of sales, you should choose
A) 3 grocery store displays and 2 convenience store displays.
B) 3 grocery store displays and 3 convenience store displays.
C) 3 grocery store displays and 4 convenience store displays.
D) 1 grocery store display and 4 convenience store displays.

Free

Multiple Choice

Q 83Q 83

Questions 83 through 85 refer to the following:
Your firm sells club soda in both grocery stores and convenience stores. You have a budget of $550 for store displays, and must decide how to allocate this budget between grocery stores and convenience stores to maximize the total number of sales. The following table shows the total number of units that can be sold in grocery stores and convenience stores, according to the number of displays in each type of store. Displays in grocery stores cost $150 each and displays in convenience stores cost $100 each.
-Given a budget of $550, the maximum possible number of sales is
A) 730.
B) 1,960.
C) 2,030.
D) 2,500.

Free

Multiple Choice

Q 84Q 84

Questions 83 through 85 refer to the following:
Your firm sells club soda in both grocery stores and convenience stores. You have a budget of $550 for store displays, and must decide how to allocate this budget between grocery stores and convenience stores to maximize the total number of sales. The following table shows the total number of units that can be sold in grocery stores and convenience stores, according to the number of displays in each type of store. Displays in grocery stores cost $150 each and displays in convenience stores cost $100 each.
-the optimal choice with a budget of $550, the last dollar spent on grocery store displays yields
A) 3.0 additional sales.
B) 3.3 additional sales.
C) 300 additional sales.
D) 500 additional sales.

Free

Multiple Choice

Q 85Q 85

Questions 86 through 88 refer to the following:
A local charity has decided to solicit donations door-to-door. The table below shows estimated donations for each hour a volunteer spends in the city, in the suburbs, and on campus.
-should a volunteer allocate 10 hours in order to maximize the amount of total donations?
A) 3 hours in the city, 4 hours in the suburbs, 3 hours on campus
B) 4 hours in the city, 3 hours in the suburbs, 3 hours on campus
C) 5 hours in the city, 4 hours in the suburbs, 1 hours on campus
D) 6 hours in the city, 4 hours in the suburbs, 0 hours on campus
E) none of the above

Free

Multiple Choice

Q 86Q 86

Questions 86 through 88 refer to the following:
A local charity has decided to solicit donations door-to-door. The table below shows estimated donations for each hour a volunteer spends in the city, in the suburbs, and on campus.
-Given an optimizing solution, the fourth hour solicited yielded
A) $ 64 in additional donations.
B) $ 68 in additional donations.
C) $239 in additional donations.
D) $279 in additional donations.

Free

Multiple Choice

Q 87Q 87

Questions 86 through 88 refer to the following:
A local charity has decided to solicit donations door-to-door. The table below shows estimated donations for each hour a volunteer spends in the city, in the suburbs, and on campus.
-10 hours of soliciting, the maximum possible amount of donations is
A) $ 106.
B) $ 157.
C) $ 628.
D) $3,290.
E) none of the above

Free

Multiple Choice

Q 88Q 88

computer services center has a problem with "malicious" computer usage. The center's director has decided to hire additional personnel to monitor computer usage. In order to minimize the total cost of the malicious usage, the director should hire the number of monitors at which
A) the marginal revenue from the last monitor equals the marginal cost of the last monitor.
B) the decrease in the cost of malicious usage from the last monitor hired equals the cost of hiring the last monitor.
C) the marginal benefit per dollar is equal across monitors.
D) both b and c
E) all of the above

Free

Multiple Choice

Q 89Q 89

Questions 90 through 93 refer to the following:
-is marginal benefit for the 3rd unit of the activity?
A) 160
B) 180
C) 115
D) 175
E) none of the above

Free

Multiple Choice

Q 90Q 90

Questions 90 through 93 refer to the following:
-is the marginal cost for the 5th unit of the activity?
A) 180
B) 175
C) 189
D) 186
E) none of the above

Free

Multiple Choice

Q 91Q 91

Questions 90 through 93 refer to the following:
-is the net benefit of the 6th unit of the activity?
A) 39
B) 0
C) 45
D) 50
E) none of the above

Free

Multiple Choice

Q 92Q 92

Questions 90 through 93 refer to the following:
-optimal level of activity is:
A) 2
B) 3
C) 4
D) 5
E) There is no optimal level in this case because marginal benefit does not equal marginal cost at any of the activity levels.

Free

Multiple Choice

Q 93Q 93

Questions 94 through 97 refer to the following:
-is marginal benefit for the 4

^{th}unit of the activity? A) 65 B) 60 C) 55 D) 50 E) none of the aboveFree

Multiple Choice

Q 94Q 94

Questions 94 through 97 refer to the following:
-is the marginal cost of the 1

^{st}unit of the activity? A) 0 B) 5 C) 10 D) 15 E) none of the aboveFree

Multiple Choice

Q 95Q 95

Questions 94 through 97 refer to the following:
-is the net benefit of the 5

^{th}unit of the activity? A) 50 B) 60 C) 70 D) 80 E) none of the aboveFree

Multiple Choice

Q 96Q 96

Questions 94 through 97 refer to the following:
-optimal level of activity is:
A) 2
B) 3
C) 4
D) 5
E) There is no optimal level in this case because marginal benefit does not equal marginal cost at any of the activity levels.

Free

Multiple Choice

Q 97Q 97

an unconstrained maximization problem, a reduction in the activity will increase net benefit if _________ ___________ exceeds _________ ___________ .

Free

Short Answer

Q 98Q 98

an unconstrained maximization problem, if at the chosen level of the activity marginal benefit is $60 and marginal cost is $45, a oneunit increase in the activity will _____________________ net benefits by $_________.

Free

Short Answer

Q 99Q 99

an unconstrained maximization problem, if at the chosen level of the activity, marginal benefit is $80 and marginal cost is $90, a oneunit decrease in the activity will _______________ net benefits by $______.

Free

Short Answer

Q 100Q 100

making decisions, both _____________ costs and _____________ costs should be ignored, and only _____________ costs and _____________ benefits should be considered.

Free

Short Answer

Q 101Q 101

marginal benefit and marginal cost functions for activity A are
MB = 100 0.04A
MC = 28 + 0.02A
a. The optimal level of A is _________ units at which MB = _________ and MC = ____________.
b. The 800

^{th}unit of A increases total benefit by $_________ and total cost by $_________ thereby _____________________ net benefit by $__________. c. The 1,400^{th}unit of A increases total benefit by $______ and total cost by $______ thereby _____________________ net benefit by $__________.Free

Essay

Q 102Q 102

the following graph showing the marginal benefit and marginal cost curves for activity A to answer the following questions.
a. Net benefit is maximized when _________ units of A are chosen; marginal benefit is $_________ and marginal cost is $_________.
b. If 300 units of A are chosen, net benefit will increase by $_________ if one _________ unit of A is used.
c. If 100 units of A are chosen, net benefit will increase by $_________ if one _________ unit of A is chosen.

Free

Essay

Q 103Q 103

in the blanks in the following table. Then use the table to answer the questions:
a. If activity X is increased from 3 to 4 units, total benefit ___________ by $_________.
b. If X is increased from 3 to 4 units, total cost ___________ by $_________.
c. If X is decreased from 6 to 5 units, total benefit ___________ by $_________, and total cost ___________ by $_________. Thus, net benefit _____________.
d. The optimal level of activity is ___ units of activity X, and net benefit at the optimal level of X is $____________.

Free

Essay

Q 104Q 104

Activity A has the following marginal (MB) and marginal cost (MC) functions:
MB = 2,500 20A
MC = 500 + 30A
where MB and MC are measured in dollars.
a. The 10

^{th}unit of the activity increases total benefit by $_________ and increases total cost by $_________. Since marginal benefit is _________ (greater, less) than marginal cost, adding the 10^{th}unit of activity _________ (increases, decreases) net benefit by $_________. b. The 50^{th}unit of the activity increases total benefit by $_________ and increases total cost by $_________. Since marginal benefit is _________ (greater, less) than marginal cost, subtracting the 50^{th}unit of activity _________ (increases, decreases) net benefit by $_________. c. The optimal level of the activity is ________ units. At the optimal level of activity, marginal benefit is $_________ and marginal cost is $__________. The total benefit (TB) and total cost (TC) functions for the activity are: TB = 2,500A 10A^{2}TC = 500A + 15A^{2}where TB and TC are measured in dollars. d. For the optimal level of the activity in part c, the total benefit is $_________, the total cost is $_________, and the net benefit is $__________.Free

Essay

Q 105Q 105

A decision maker can choose the levels of two activities, A and B, so as to maximize net benefits. The marginal benefit functions of A and B are
Activity A costs $160 per unit and activity B Costs $540 per unit.
a. The optimal level of activity A is _________ units.
b. The optimal level of activity B is _________ units.

Free

Essay

Q 106Q 106

Suppose the marginal benefit of saving one more spotted owl is $1.2 million, and the marginal cost of saving one more spotted owl is $8 million. Saving one more spotted owl will cause net benefit from saving owls to _______________________(increase, decrease) by $ _______________. In this situation, society is saving ___________________ (too few, too many) spotted owls.

Free

Short Answer

Q 107Q 107

Your firm sells club soda in both grocery stores and convenience stores. You have a budget of $550 for store displays, and must decide how to allocate this budget between grocery stores and convenience stores to maximize the total number of sales. The following table shows the total number of units that can be sold in grocery stores and convenience stores, according to the number of displays in each type of store. Displays in grocery stores cost $150 each and displays in convenience stores cost $100 each.
a. With $550 to spend, the total number of units sold will be maximized by choosing ______ displays in grocery stores and ______ displays in convenience stores. With $550 to spend, the maximum number of units that can be sold is ________.
b. Suppose your firm can spend $1,200 on store displays. The total number of units sold will be maximized by choosing ______ displays in grocery stores and ______ displays in convenience stores. The maximum number of units that can be sold is ________.

Free

Essay

Q 108Q 108

Westco Petroleum paid Sun Control Systems $42 million to design and install a computerized control system for its oil refinery located near Los Angeles. The computerized control system monitored and controlled almost every petrochemical process at the facility. The control system consisted of an extremely complicated configuration of computers and custom-designed software. One year after completing the installation of the control system, a junior vice president at Westco recommended shutting down the Los Angeles refinery because "the money spent on the computerized control system made the refinery too costly to operate." Evaluate the vice president's advice.

Free

Essay