Exam 1: Economics: Foundations and Models

Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.Then,the plumber should not stay open for the extra hour if she can only generate additional revenue of $145 for that hour.

As population declines,scarcity eventually disappears.

The U.S.Bureau of Labor Statistics predicts that 9 of the 20 fastest growing occupations over the next ten years will be in

Lionel's Lawn Care is a company that maintains residential yards.Lionel's cost for his standard package of mowing,edging,and trimming is $15,and he charges $25 for this service.For a total price of $40,Lionel will also trim shrubs,a service that adds an additional $10 to the total cost of the standard package.What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?

Table 1-6 Hours Open Tatal Revenue (dallars) 1 \ 275 2 375 3 450 4 500 5 530 6 550 Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour. -Refer to Table 1-6.What is Ivan's marginal benefit if he decides to stay open for six hours instead of five hours?

When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it,________ occurs.

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

The three fundamental questions that any economy must address are:

Article Summary In an August 2013 speech from the Lincoln Memorial, President Obama was expected to emphasize that increased economic equality is needed to improve racial equality. Economic gaps based on race have endured for 50 years, with the differences in unemployment rates between blacks and whites remaining virtually unchanged and the gap in wealth actually increasing. "If you look at 50 years after the 1960s civil rights movement, the most stubborn and persistent challenge when it comes to the nation's racial challenge remains in the areas of economics and wealth," said Marc Morial, president of the National Urban League. -Refer to the Article Summary.The article mentions increased economic equality is needed in terms of wealth.How would a more equal distribution of wealth differ from a more equitable distribution of wealth?

Recent changes occurring within the U.S.health care system,including lower insurance reimbursement rates,have resulted in

Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."

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 if so by how much?

Economists reason that the optimal decision is to continue any activity up to the point where the

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

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

Table 1-5 Hours Open Total Revenue (dollars) 1 \ 40 2 65 3 80 4 90 5 95 6 98 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 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 cost if he decides to stay open for three hours instead of two hours?

What is a household? How do households interact with firms in a market?

What does the term "marginal" mean in economics?

List the five main factors of production.

Article Summary In an August 2013 speech from the Lincoln Memorial, President Obama was expected to emphasize that increased economic equality is needed to improve racial equality. Economic gaps based on race have endured for 50 years, with the differences in unemployment rates between blacks and whites remaining virtually unchanged and the gap in wealth actually increasing. "If you look at 50 years after the 1960s civil rights movement, the most stubborn and persistent challenge when it comes to the nation's racial challenge remains in the areas of economics and wealth," said Marc Morial, president of the National Urban League. -Refer to the Article Summary.The article mentions increased economic equality is needed in terms of wealth,and for some people this means a more equitable distribution of wealth.Would an equitable distribution of wealth necessarily be the most efficient distribution of wealth?