Exam 1: Economics: Foundations and Models

Table 1-6 Hours Open Total Revenue (dollars) 1 \ 275 2 375 3 450 4 500 5 530 6 550 Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour. -Refer to Table 1-6.What is Ivan's marginal benefit if he decides to stay open for six hours instead of five hours?

Article Summary In a January, 2017 report, the World Economic Forum stated that the growing income gap has become one of the biggest threats to the global economy and cannot be remedied solely by higher economic growth. Although income inequality has fallen over the past 30 years on a global level, in high-income countries like the United States and the United Kingdom, the top 1% of income earners have benefitted disproportionately from economic growth. This has led a growing belief that the traditional model for economic growth does not result in a population-wide increase in income. According to the report, "The growing mood of anti-establishment populism suggests we may have passed the stage where [reviving economic growth] alone would remedy fractures in society: reforming market capitalism must also be added to the agenda." Source: Lauren Gensler, "Rising Income Inequality Is Throwing The Future Of Capitalism Into Question, Says World Economic Forum," Forbes, January 11, 2017. -Refer to the Article Summary.The article discusses income inequality and how economic growth alone is no longer resulting in a more equitable distribution of income.If governments increased equity by reducing the incomes of high-income people and increasing the incomes of the poor,would it be possible that fewer goods and services would be produced and less saving would take place?

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

The relationship between consumer spending and disposable personal income is

Figure 1.1 -Refer to Figure 1-1.Using the information in the figure above,calculate the percentage change in revenue from alcoholic beverage sales between 2012 and 2016.

Which of the following statements about economic resources is true?

Scenario 1-4 Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week. The plant foreman observes, "Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000, we are only making an overall profit of $3,000 per week so I think we need to cut back on production. -Refer to Scenario 1-4.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 500 cigars?

Marginal cost is the ________ associated with a particular increase in an activity.

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?

All of the following questions or statements regarding tariffs are positive statements except:

The processes used to produce goods and services describes

If the marginal cost of producing a television is constant at $200,then a firm should produce this item

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets,and therefore choose to invest in foreign markets.By using all available information as they act to achieve their goals,these investors are exemplifying the economic idea that

________ 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.

Table 1-1 Extra Hours Open Total Revenue (dollars) 1 \ 50 2 75 3 95 4 110 5 120 6 125 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.Using marginal analysis,by how many hours should Lydia extend her nail salon's hours of operations?

If it costs Vijay $150 to design 5 Web sites and $175 to design 6 Web sites,then $175 is the marginal cost of producing the 6th Web site.

Which of the following is motivated by an efficiency concern?

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

Which of the following is an example of an economic trade-off that a firm has to make?

Which of the following statements is true about profit?