Exam 1: Economics: Foundations and Models

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.Using marginal analysis,determine how many hours should Julius extend his shop's hours of operations?

Which of the following is a normative economic statement?

Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Which of the following correctly describes the relationship between economic efficiency and economic equity?

Two-dimensional graphs have a horizontal and a vertical axis and are used in economics to illustrate

Define macroeconomics.

Which of the following is motivated by an equity concern?

Define allocative efficiency.Explain the significance of this concept in economics?

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

All economic questions arise from the fact that resources are scarce.

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

Automobile manufacturers produce a range of automobiles such as sports utility vehicles,luxury sedans,pickup trucks and compact cars.What fundamental economic question are they addressing by making this range of products?

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

The relationship between sales and revenue is

An economic model is a complex version of reality used to analyze real-world economic situations.

The Coffee Nook,a small cafe near campus,sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

What is a firm? What other terms do economists use interchangeably with the term "firm"?

What is voluntary exchange?

Fiona shares an office with her ex-husband.Her share of the rent and utilities are $625 per month.She is considering moving to a home office which she will not have to share with anyone.The home office will not cost her anything as far as extra rent or utilities.Recently,you ran into Fiona at the gym and she tells you that she has moved into her home office.Fiona is as rational as any other person.As an economics major,you rightly conclude that

Which of the following are positive economic statements and which are normative economic statements? a.An increase in the price of gasoline will decrease the quantity of gasoline purchased.. b.The government should eliminate the minimum wage. c.All states should raise the minimum wage to at least $10 per hour. d.The government should scrap its current income tax structure in favor of a flat tax. e.Unemployment has increased since the onset of the recession. f.The government should not bail out investment banks during a financial crisis.