Exam 1: Economics: Foundations and Models

Scenario 1-4 Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes, "Although the last 500 cell cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production." -Refer to Scenario 1-4.Had the firm not produced and sold the last 500 cigars,would its profit be higher or lower,and if so by how much?

Which of the following is an example of a "how much" decision?

Allocative efficiency is achieved when

DeShawn's Detailing is a service that details cars at the customers' homes or places of work.DeShawn's cost for a basic detailing package is $40,and he charges $75 for this service.For a total price of $90,DeShawn will also detail the car's engine,a service that adds an additional $20 to the total cost of the package.What is DeShawn's marginal benefit if he sells a basic detailing package?

The term "market" refers to trading arrangements by which buyers and sellers come together.

Trade-offs force society to make choices when answering what three fundamental questions?

Scenario 1-4 Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes, "Although the last 500 cell cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production." -Refer to Scenario 1-4.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 500 cigars?

Which of the following is not an example of an economic trade-off that a firm has to make?

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 benefit if he decides to stay open for three hours instead of two hours?

Jewelry manufacturers produce a range of products such as rings,necklaces,bracelets,and brooches.What fundamental economic question are they addressing by offering this range of items?

"The distribution of income should be left to the market" is an example of a positive economic statement.

"The distribution of income should be determined by the government" is an example of a normative economic statement.

Which of the following is an example of an economic trade-off that a firm has to make?

If it costs Vijay $150 to design 5 websites and $175 to design 6 websites,then $175 is the marginal cost of producing the 6th websites.

How are the fundamental economic decisions determined in Cuba?

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 benefit if he sells the standard package?

Explain why economics is considered a social science.

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.Using marginal analysis terminology,another economic term for the incremental cost of producing the last 300 hats is

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?

Which of the following is motivated by an efficiency concern?