Question

3. Gladys is planning to sell her house, and she is considering making two upgrades to the house before listing it for sale. Replacing the carpeting will cost her $2,500 and replacing the roof will cost her $9,000. Gladys expects the new carpeting to increase the value of her house by $3,200 and the new roof to increase the value of her house by $7,500.
A. She should make both improvements to her house.
B. She should replace the carpeting but not replace the roof.
C. She should replace the roof but not replace the carpeting.
D. She should not make either improvement to her house.
E. She obviously needs more information before she is able to make a rational decision.

4. Which of the following statements is correct?
A. Efficiency refers to the size of the economic pie; equality refers to how the pie is divided.
B. Government policies usually improve upon both equality and efficiency.
C. As long as the economic pie continually gets larger, no one will have to go hungry.
D. Efficiency and equality can both be achieved if the economic pie is cut into equal pieces.
E. Both B and C are correct

5. Which of the following statements is (are) correct?
(x) Prices direct economic activity in a market economy by influencing the actions of buyers and sellers.
(y) In a market economy, prices reflect the both the value of a good to society and the cost to society of producing the good.
(z) In a market economy decisions are guided by individual self-interest. Hence, there is a strong need for government intervention in the market because individuals that act out of self-interest will make market economies less efficient than command economies.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only

Answer 1

3) (B) She should replace the carpeting but not replace the roof.

The replacing should be done only if it increases the selling value of the house more than the cost of replacing. Replacing the carpeting increases the house value by more amount than the cost incurred ($3200>$2500), so it should be replaced. But replacing the roof costs more than the value increased ($7500<$9000), so it should be not be replaced.

Please post the other questions separately. Thanks and good luck :)