Exam 1: Economics: Foundations and Models

Table 1-1 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 extra hours the nail salon is open as shown in the table above. She would have to hire a worker for those extra hours at a wage rate of $10 per hour. -Refer to Table 1-1.What is Lydia's marginal benefit if she decides to stay open for an extra two hours instead of one hour?

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal benefit.

What is the difference between goods and services?

What is a mixed economy?

The prevalence of Alzheimer's dementia is very high among residents living in nursing homes.A student concludes that it is likely that living in a nursing home causes Alzheimer's dementia.What is the flaw in the student's reasoning?

Ford assembles some cars in Mexico because the lower wages the company pays to Mexican workers and the lower prices it pays for auto parts in Mexico reduces Ford's costs.This is an example of Ford reacting to which of the three key economic ideas?

Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service.For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package.Should Allison continue to offer the 3-color pinstripe application?

Explain the economic idea that "people respond to incentives."

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

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

A firm's technology may depend on which of the following factors?

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

At a recent faculty meeting, Lorraine Waverly, president of Skywalker College, announced that enrollment is up by 12 percent over the previous semester.If enrollment the previous semester was 3,250 students, what is the student enrollment this semester?

When production reflects consumer preferences, ________ occurs.

Economists assume that rational people do all of the following except

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

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 revenue received from the sale of the last 3,000 cell phones?

Economists assume that rational behavior is useful in explaining choices people make

Since 1994, obesity rates in the United States

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