Exam 1: Economics: Foundations and Models

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 DeShawn's marginal benefit if he sells a basic detailing package?

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces, then $50 is the marginal cost of producing the fifth necklace.

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

If the marginal cost of keeping a dentist's office open one additional hour per day is $300, then the dentist should keep the office open for one extra hour:

When Mr Riley decides on the companies to which he will donate his time and money, a ________ issue is being addressed.

Trina quits her $90 000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of her decision?

By definition, economics is the study of:

In economics, the place where buyers and sellers come together to trade is called a

In a modern mixed economy, who decides what goods and services will be produced?

Abigail's Auto Art is a company that applies pinstripes to vehicles. Abigail's cost for a basic 1-colour pinstriping job is $40, and she charges $100 for this service. For a total price of $185, Abigail will apply a fancier 3-colour pinstripe application to an automobile, a service that adds an additional $50 to the total cost of the package. Should Abigail continue to offer the 3-colour pinstripe application?

The three fundamental questions that any economy must address are:

Making optimal decisions 'at the margin' requires:

What is meant by the statement that 'optimal decisions are made at the margin'? _____________________________________________________________________________________________ _____________________________________________________________________________________________

If the price of milk was $2.75 a litre and it is now $3.50 a litre, what is the percentage change in price?

A(n)_________________ cost is the highest valued alternative that must be given up to engage in an activity.

Jewellery 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?

Which of the following is a 'normative' economic statement?

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

What is the 'omitted variable' problem in determining cause and effect?

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.