Question

11. A rational person will

                a. never make mistakes in choices.

                b. select the choice where the expected present benefit is greater than the expected value of the costs.

                c. follow the Maslow Hierarchy of wants.

                d. be uncaring and void of emotions

12. Assume that your company produces two goods; laptops and tablets. Assume also that your company has limited resources (including time) to devote to producing these items. Now assume that the laptop team does something to improve the efficiency of making laptops, while the tablet team holds to old methods. Give the change, you can

                a. only increase your production of laptops

                b. only increase your production of tablets.

                c. increase your production of both items.

                d. not increase your production in either tablets or laptops.

13. Rational behavior can be applied to

                a. individuals

                b. politicians

                c. government officials

                d. all of the above

14. A rational student will continue studying in a given study session until

                a. the total value of the studying equals the total opportunity cost.

                b. the marginal value of the last unit studied equals the marginal cost of the last unit.

                c. the expected grade is an A.

                d. the expected grade is a B.

                e. the expected grade is passing.

15. When individuals face viable alternatives,

                a. there is choice.

                b. there is always cost.

                c. A and B.

                d. rational behavior is not possible.

16. Management’s snooping on employees when they are working can

                a. reduce problem exhibited by workers who are “out on their own” to get the job done.

                b. overcome prisoner’s dilemmas workers face at work, which will then lead to an increase in worker on the job satisfaction and higher wages.

                c. cause worker irritation, but workers can still be better off with the snooping because of their higher wages resulting from greater worker productivity.

                d. be helpful to managers’ efforts to reduce shirking.

                e. all of the above.

17. The toughest bosses are likely to be

                a. taxpayers.

                b. government bureaucrats.

                c. residual claimants (owners).

                d. sole entrepreneurs.

                e. C and D.

18. Rational behavior does NOT mean that people are

                a. totally self-centered

                b. able to define their wants

                c. able to order their wants.

                d. able to consistently choose among their ordered wants.

19. If the benefits of a given choice option are delayed further into the future (all other relevant factors remaining constant), then the present value of the option will

                a. increase.

                b. decrease.

                c. remain the same

                d. (Unknown, not enough information to say)

20. The more risky future option or alternatives are;

                a. the less rational people will necessarily be.

                b. the more future values must be discounted to obtain their present values.

                c. the greater their present values.

                d. the great their net values in the future.

Answer 1

(11) (b)

A rational person will select an alternative only if its expected present value of benefits are higher than the expected present value of costs.

(12) (a)

A rational decision maker will choose to produce more of that good which has higher efficiency.

(13) (d)

Rational behavior applies to all decision making entities.

(14) (b)

Consumption of any good will happen until its marginal benefit equals its marginal cost.

(15) (c)

Selecting one alternative over another entails a choice that involves opportunity costs.

NOTE: As HOMEWORKLIB Answering Policy, 1st 5 questions are answered.