Exam 1: Economics: Foundations and Models

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

The study of economics arises due to

Cassie's Quilts alters,reconstructs and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What is her marginal benefit if she sells the quilt "as is" now?

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces,then $50 is the marginal cost of producing the 5th necklace.

Scenario 1-3 Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts." -Refer to Scenario 1-3.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 400 t-shirts?

"A decrease in the price of digital cameras will decrease the demand for camera film." This statement is an example of a positive economic statement.

All of the following is counted as "capital" in economics except

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 his marginal benefit if he sells the machine "as is" now?

As recently as 2000,________ percent of doctors were in private practice and by 2013,________ percent of doctors were in private practice.

Which of the following is a positive economic statement?

Which of the following statements about positive economic analysis is true?

Which of the following is a macroeconomics question?

Economists assume that individuals

Suppose when the price of laptops fall,college students buy more laptops.This implies that

Mrs.Lovejoy decides to invest in companies which she believes can produce its goods at the lowest possible cost.Mrs.Lovejoy is investing in companies that are

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

In the market for factors of production,households earn income by supplying factors of production to firms.

In a centrally planned economy,the households and firms decide how economic resources will be allocated.

Table 1-4 Hours Open Total Revenue (dollars) 1 \ 35 2 60 3 80 4 92 5 100 6 105 Eva runs a small bakery in the village of Roggerli.She is debating whether she should extend her hours of operation.Eva figures that her sales revenue will depend on the number of hours the bakery is open as shown in the table above.She would have to hire a worker for those hours at a wage rate of $12 per hour. -Refer to Table 1-4.What is Eva's marginal cost if she decides to stay open for two hours instead of one hour?