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Economic Decision Making and Cost-Benefit Analysis Quiz

12 Questions

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Economic Decision Making and Cost-Benefit Analysis Quiz

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Questions and Answers

What is the formula for calculating the net benefit of attending the concert?

Payment received − Cost of effort involved

Cost of ticket + Enjoyment from attending

Cost of ticket − Enjoyment from attending

Enjoyment from attending − Cost of ticket (correct)

Which economic concept is defined as 'What you lose when you choose one action rather than the next best alternative'?

Economic cost

Opportunity cost (correct)

Economic rent

Direct costs

How is economic cost calculated?

Direct costs + Opportunity cost (correct)

Value of lost opportunity

Direct costs incurred by taking the action

Opportunity cost - Direct costs

What is considered an economic cost according to the text?

Direct costs + Opportunity cost Signup and view all the answers

When should an action be taken?

If the benefit is greater than the economic cost Signup and view all the answers

Which concept reflects the lost opportunity when choosing one action over another?

Opportunity cost Signup and view all the answers

What is the economic rent from attending the concert?

$8 Signup and view all the answers

In terms of economic rent, what does it signify when an individual chooses an option with a greater net benefit than the next best alternative?

Economic rent Signup and view all the answers

What is innovation rent in the context of introducing new technology?

Profits exceeding the opportunity cost of capital Signup and view all the answers

How are economic rents related to incentives in the economy?

They provide rewards or punishments that influence actions Signup and view all the answers

What do relative prices signify in economics?

The ratio of one price to another Signup and view all the answers

How is net benefit calculated in the context of economic decisions?

$55−$30 Signup and view all the answers