Exam 1: Economics: Foundations and Models

Voluntary exchange between buyers and sellers generates ________ in a market economy.

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

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.

What is a centrally planned economy?

In economics, all of the following is counted as "capital" except

If a straight line passes through the point x = 14 and y = 3 and also through the point x = 4 and y = 10, the slope of this line is

The branch of economics which studies how households and firms interact in markets is called

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

Consider the following statements: A.Consumers buy more MP3 players from an electronics store that sells MP3 players at a lower price than other rival electronics stores in the area. B.Schools take steps to increase security since they believe it is more costly to allow vandalism than to hire additional security guards. C.Citrus growers produce more oranges when the selling price of oranges falls. Which of the above statements demonstrates that economic agents respond to incentives?

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

Marginal benefit refers to the additional benefit that your activity provides to you.

The branch of economics which studies the behavior of entire economies is called

In 2015, Smileytown consumed 12,000 gallons of mouthwash.In 2016, mouthwash consumption rose to 17,000 gallons.Calculate the percentage change in mouthwash consumption.

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.Using marginal analysis terminology, another economic term for the incremental cost of producing the last 300 hats is

Suppose the U.S.government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000.These doctors would be exemplifying the economic idea that

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

What is voluntary exchange?

On a two-dimensional graph, ________ allows for the effects of additional variables.

What is an economic model?

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.What is Thuy Anh's marginal benefit if she decides to stay open for an extra three hours instead of two hours?