Exam 1: Economics: Foundations and Models

What is a 'marginal cost'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

A university must decide if it wants to offer more Internet-based classes. This decision involves answering the economic question of 'what to produce'.

In a market economy, what is generated by voluntary exchange between buyers and sellers?

The Coffee Korner, a small cafe near campus, sells lattes for $3.00 and biscotti for $1.50 each. What is the opportunity cost of buying a latte?

Which of the following questions or statements regarding medical school is normative?

What does making 'how much' decisions involve?

Even if the population declines, scarcity will still exist.

'Allocative efficiency' best explains ________, and productive efficiency best explains ________.

Optimal decisions are made at the point where marginal cost equals zero.

Trina's Tropical Fish Store sells goldfish for $3 each and angelfish for $9 each. What is the opportunity cost of buying a goldfish?

Figure 1.2 -Refer to Figure 1.2. Calculate the area of the triangle A.

What does the existence of markets promote?

Society faces a trade-off in all of the following situations except:

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. _____________________________________________________________________________________________ _____________________________________________________________________________________________

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 $45, and he charges $80 for this service. For a total price of $95, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package?

In economics, choices must be made because we live in a world of:

What is 'voluntary exchange'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

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

Policies based on positive economic ideas tend to decrease economic efficiency and reduce equity.

'Allocative efficiency' is achieved when firms produce goods and services: