1. Which of the following is probably the best example of a sunk cost?

(a) television ad (b) sports car (c) gold coin collection (d) machinery that has many industry uses

2. Joseph can initially produce 10 pizzas or 5 cakes. After some training from a pizza-making expert, his opportunity cost of making (a) cakes will remain unchanged (b) 1 cake will become less than 2 pizzas (c) 1 cake will become equal to 1 pizza (d) 1 cake will become more than 2 pizzas

3. If a 5% rise in price results in a 15% reduction in quantity demanded, the price elasticity of demand is (a) -0.03 (b) -3.00 (c) -300 (d) -0.33

4. If average total cost is equal to marginal cost

(a) total fixed costs are at a maximum

(b) average total cost is at a minimum

(c) average variable cost is at a minimum

(d) total costs are at a maximum

5. If the average produce is 4 and the marginal product is 5, the

(a) average product will fall

(b) marginal product will rise

(c) marginal product will fall

(d) average product will rise