Exam 1: Economics: Foundations and Models

Table 1-2 Thuy Anh runs a small flower shop in the town of Florabunda.She is debating whether she should extend her hours of operation.Thuy Anh figures that her sales revenue will depend on the number of extra hours the flower shop is open as shown in the table above.She would have to hire a worker for those extra hours at a wage rate of $16 per hour. -Refer to Table 1-2.Using marginal analysis, by how many hours should Thuy Anh extend her flower shop's hours of operations?

In economics, the accumulated skills and training that workers have is known as

Explain why economics is considered a social science.

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.What is Allison's marginal benefit if she sells a basic 1-color job?

Trinh quits his $80,000-a-year job to become a full-time volunteer at a museum.What is the opportunity cost of his decision?

The highest valued alternative that must be given up to engage in an activity is the definition of

Suppose when the price of laptops fall, college students buy more laptops.This implies that

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________.

One example of physical capital is the amount of savings that you have.

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

Economists assume that rational people do all of the following except

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

Scenario 1-2 Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week.The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, 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 hats." -Refer to Scenario 1-2.Had the firm not produced and sold the last 300 hats, would its profit be higher or lower, and by how much?

The town of Harmonia gives away all 500 tickets to its annual Founder's Day Free Concert-in-the-Park to local residents.Each year, more than 500 people wish to attend the concert, so some of the residents who receive the free tickets sell them for as much as $75 each.Is a transaction where someone pays a resident $75 for a "free ticket" economically efficient?