Question

6. Cows are not endangered because

a.	they are a private good.
b.	there are laws that protect property rights.
c.	owners can profit off of cows.
d.	All of the above.

7. Economists assume entrepreneurs are motivated by

a.	an innate love for the type of business that he or she starts.
b.	an altruistic desire to provide the world with a good product.
c.	maximizing profits.
d.	All of the above.

8. The things that must be forgone to acquire a good are called

a.	implicit and explicit costs.
b.	opportunity costs.
c.	Both a and b.
d.	None of the above.

9. An example of an opportunity cost that is also an explicit cost is

a.	the value of a forgone business investment.
b.	the cost of raw materials.
c.	the value of the business owner’s time.
d.	All of the above are correct.

10. On a 50-acre farm, a farmer is able to produce 2,000 bushels of wheat when he hires 2 workers. He is able to produce 2,800 bushels of wheat when he hires 3 workers. Which of the following possibilities is consistent with the property of diminishing marginal product?

a.	The farmer is able to produce 3,000 bushels of wheat when he hires 4 workers.
b.	The farmer is able to produce 3,200 bushels of wheat when he hires 4 workers.
c.	The farmer is able to produce 3,400 bushels of wheat when he hires 4 workers.
d.	Any of the above could be correct.

Answer 1

6. Cows are not endangered because they are a private good. Hence, option(A) is correct.

7. Economists assume entrepreneurs are motivated by maximizing profits. Hence, option(C) is correct.

8. The things that must be foregone to acquire a good are called opportunity costs. Hence, option(B) is correct.

9. An example of an opportunity cost that is also an explicit cost is the value of the business owener's time. Hence, option(C) is correct.

10. When L=2 workers, total product= 2000 bushels of wheat

When L=3, TP= 2800 bushels of wheat

This implies MP= (2800-2000)= 800 bushels of wheat.

For the property of diminishing marginal product , the marginal product for 4th worker should be less than 800, that means total product for 4 workers should be less (2800+800)= 3600 bushels of wheat.

Therefore, if the farmer is able to produce 3000 bushels of wheat or 3200 bushels of wheat or 3400 bushels of wheat when he hires 4 workers shows the property of diminishing marginal product.Hence, option(D) is correct.