Patti buys a new kind of cereal to try even though it's more expensive than her favorite kind. After a single bowl, Patti decides she does not care for the new cereal at all, and she:
A. throws it away, because she irrationally spent money on something she had no information about.
B. forces herself to finish it, because she irrationally focuses on the sunk cost of the cereal.
C. forces herself to finish it, because she rationally computes the cost per bowl.
D. None of these is likely to happen for the reason stated.
Answer: B
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In the oil tanker industry, large companies have lower risk and are able to optimize vessel utilization. If consolidation allows companies to lower their long-run average total costs, this is an example of:
a. the opportunity costs of mergers. b. the increase in utility of managers by being able to control larger companies. c. the dangers of oil tankers to the environment. d. the economies of scale in the oil tanker industry. e. the law of diminishing returns.
If the purchase and sale of marijuana becomes legalized
A) the equilibrium price and quantity will both rise. B) the equilibrium price will fall, but the change in equilibrium quantity depends upon whether the demand curve shifts rightward more or the supply curve shifts rightward more. C) the equilibrium quantity will rise, but the change in equilibrium price depends upon whether the demand curve shifts rightward more or the supply curve shifts rightward more. D) the equilibrium price and quantity will both fall.
The best measure of average income for a country is
A. Real GDP. B. The economic growth rate. C. Per capita GDP. D. The capital stock of the economy.
Credit card balances are not considered to be money primarily because they:
A. are not part of people's wealth. B. are an asset used in making transactions. C. are rarely used to make purchases. D. do not represent an obligation to pay someone else.