Exam 1: Economics: Foundations and Models

What is equity,and how does it differ from efficiency?

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 hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour. -Refer to Table 1-1.Using marginal analysis,determine how many hours should Lydia extend her nail salon's hours of operations?

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 $40,and he charges $75 for this service.For a total price of $90,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?

Which of the following statements is true?

Which of the following is a positive economic statement?

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

Explain the economic assumption that "people are rational."

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

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

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

Which of the following statements is true about scarcity?

The economic analysis of minimum wage involves both normative and positive analysis.Consider the following consequences of a minimum wage: A.The minimum wage law causes unemployment. B.A minimum wage law benefits some groups and hurts others. C.In some cities such as San Francisco and New York,it would be impossible for low-skilled workers to live in the city without minimum wage laws. D.The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses. Which of the consequences above are positive statements and which are normative statements?

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

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.Had the firm not produced and sold the last 3,000 cell phones,would its profit be higher or lower,and if so by how much?

The distribution of income primarily determines which of the fundamental economic questions?

Which of the following is a normative economic statement?

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

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

Which of the following is a positive economic statement?

In economics,the term "equity" means