Unit 1 Flashcard 2 SSEF2 Cost & Cost/Benefit Analysis

Front

Every time we make an economic choice, what two things occur?

Back

a benefit and a cost

Front

People make decisions by comparing cost and benefits.

Back

comparing cost and benefits

Front

Why would going to the movies be considered a rational economic decision?

Back

If the marginal benefit of seeing a movie that you want to see with friends outweighs the cost of staying home and taking a nap.

Front

Economic decisions are based upon what process?

Back

cost/benefit analysis

Front

Rational decision-makers take an action if and only if...

Back

the marginal benefit exceeds the marginal cost

Front

Dino operates a museum that showcases rare fossils. Recently, he has seen an increase in business and is determining whether to hire a new employee. If acting rationally, on what should he base his decision?

Back

if the marginal revenue generated by the new worker's labor is greater than the marginal cost of the worker's salary

Front

To arrive at an economic decision, a ___________________may be used to evaluate the expense of making a decision relative that decisions payoff. As a result, we have engaged in cost-benefit analysis of a decision.

Back

decision-making grid (PACE)

Front

Charlie went to the fair. At the end of the night, he had two ride tokens left. He could use them both to ride the Ferris Wheel one last time, or he could use one to visit the Fun House, and one to ride the Roller Coaster. Charlie decided to ride the Ferris Wheel. Which choice BEST describes Charlie's choice?

Back

Charlie decided the marginal benefit of spending two tokens on the Ferris Wheel exceeded the marginal cost of giving up two rides.

Front

For a business to make a profit, marginal benefits must be which of the following?
- greater than marginal costs
- less than fixed costs
- equal to variable costs
- separate from labor costs

Back

greater than marginal costs

Front

When a consumer is choosing between purchasing two different items with the same price, he or she will MOST LIKELY purchase the item with the maximum

Back

marginal benefit