David Finds He Has One Hour of Time in the Evening

question 191

Multiple Choice

David finds he has one hour of time in the evening to allocate on the first day of the new semester. He can do one of two things. He can watch TV for one hour or he can open his economics textbook and read for an hour. The benefit of watching TV is 30; the benefit of reading about economics is 20.
-Suppose that,instead of the first day of the semester,it is the night before David's first exam in economics.One could reasonably predict that the

• A) benefit of watching TV will rise.
• B) benefit of reading about economics will fall.
• C) the opportunity cost of watching TV will rise.
• D) the opportunity cost of reading economics will rise.
• E) he will continue to make the same choicE.

---

Definitions:

Finished Goods Inventory

Inventory of finished goods available for sale.

Standard Costs

Predetermined costs used for product costing, budgeting, and measuring performance, usually reflecting ideal expenses under normal conditions.

Work in Process

Goods in various stages of production within a factory, not yet completed but also not raw materials.

Fixed Manufacturing Overhead

The costs associated with production that do not change with the level of output, such as depreciation of equipment and salary of the factory manager.