Exam 1: Economics: Foundations and Models

Consider the following economic agents: a.the government b.consumers c.producers Who,in a modern mixed economy,decides what goods and services will be produced with the scarce resources available in that economy?

You explain to your roommate Surya,who makes beaded headbands,about an economic theory which asserts that consumers will purchase more of a product at lower prices than they will at higher prices.She contends that the theory is incorrect because over the past two years she has lowered the price of her headbands and yet has seen a decrease in sales.How would you respond to Surya?

A college must decide if it wants to offer more adult literacy classes.This decision involves answering the economic question of "for whom to produce."

Which of the following is not an example of an efficiency-equity trade-off faced by economic agents?

Examining the conditions that could lead to a recession in an economy is an example of macroeconomics topic.

Table 1-1 Hours Open Total Revenue (dollars) 1 \ 50 2 75 3 95 4 110 5 120 6 125 Lydia runs a small nail salon in the town of New Hope.She is debating whether she should extend her hours of operation.Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above.She would have to hire a worker for those hours at a wage rate of $10 per hour. -Refer to Table 1-1.What is Lydia's marginal cost if she decides to stay open for two hours instead of one hour?

What is the "reverse causality" problem in determining cause and effect?

Economics is the study of the ________ people make to attain their goals,given their ________ resources.

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Physical capital refers to stocks and bonds.

In the first six months of 2003,branches of Commerce Bank in New York City were robbed 14 times.The New York City Police recommended steps the bank could take to deter robberies,including the installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take their advice.According to a deputy commissioner of police,"Commerce does very little of what we recommend.They've told our detectives they have no interest in ever putting in the barriers." It would seem that Commerce bank would have a strong incentive to install "bandit barriers" to deter robberies.Why wouldn't they do it?

A restaurant sells a large soft drink at a fixed price of $1.79.A term used by economists to describe the money received from the sale of an additional large soft drink is

Which of the following is a normative economic statement?

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

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish,because failure to do this could ________ the efficiency of the system by producing some goods and services that are ________.

Assume that it will cost a plumber an additional $35,000 each year by keeping her shop open for one additional hour per week.What must the additional revenue from keeping the shop open this additional hour per week be to make staying open for the extra hour economically rational?

The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomics topic.

Scenario 1-1 Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week.A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, 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 cell phones." -Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 3,000 cell phones?

Economics promotes which of the following as the way to make the best decision?

Which of the following statements is true about profit?