Exam 1: Economics: Foundations and Models

Table 1-5 Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. -Refer to Table 1-5. What is Julius's marginal benefit if he decides to stay open for three hours instead of two hours?

Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What is the marginal cost of completing the task?

Scarcity refers to the situation in which

Mr. Peabody chooses to invest in companies that produce goods and services at the lowest possible cost. Mr. Peabody is investing in companies that are

Which of the following is motivated by an efficiency concern?

Every society faces economic trade-offs. This means

What is the "omitted variable" problem in determining cause and effect?

One example of physical capital is the amount of savings that you have.

Economists assume that rational behavior is useful in explaining choices people make

Scenario 1-2 Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of hats." -Refer to Scenario 1-2. Had the firm not produced and sold the last 300 hats, would its profit be higher or lower, and by how much?

The distribution of income primarily determines which of the fundamental economic questions?

Which of the following statements about competition in a market is true?

One example of human capital is the amount of savings that you have.

Which of the following is an example of an activity undertaken by an entrepreneur?

As population declines, scarcity eventually disappears.

Dr. Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services. How can Dr. Goldfinger strive to achieve this productive efficiency?

At a recent company meeting, Ravi Batra, sales manager of Life's a Beach, a surfboard producer announced, "We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago, its sales amounted to $245,000, what is the value of its sales today?

How are the fundamental economic decisions determined in Cuba?

The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a gallon of milk?

The decision about what goods and services will be produced in a market economy is made by