You're deciding whether to install an $800 moonroof and a $400 security system in your car. Suppose the marginal benefit from the moonroof is $700 and the marginal benefit from the security system is $600. The economic decision rule dictates that you should:
A. purchase both options because the combined cost of both is less than the combined benefit.
B. not purchase either because the benefits of each do not exceed the costs.
C. purchase only the security system because its marginal benefit exceeds its marginal cost.
D. purchase only the moonroof because that will provide you with the greatest marginal benefit.
Answer: C
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Sales taxes are
A. assessed on the prices paid on a large set of goods and services. B. based on each individual taxpayer's income level. C. levied on purchases of a particular good or service. D. collected only by the U.S. government.
The primary signal to policy makers that the economy has exceeded potential output is typically:
A. stagflation. B. unemployment. C. deflation. D. inflation.
Suppose you own a plum (high-quality) used car that you are thinking about selling. Further, suppose you know that buyers assume that there is a 30% chance of getting a plum, and that 8 of 10 cars currently in the used car market are lemons (low-quality). Would you likely sell your car?
What will be an ideal response?
Referring to Table 4.2, Box F should be filled with 
A. $0. B. $30. C. $40. D. $10.