Exam 1: Economics: Foundations and Models

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 cost of producing the last 3,000 cell phones?

Table 1-5 Hours Open Total Revenue (dollars) 1 \ 40 2 65 3 80 4 90 5 95 6 98 Julius runs a small tailor shop in the city of Bloomfield. He is debating whether he should extend his hours of operation. Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. -Refer to Table 1-5.Using marginal analysis,how many hours should Julius extend his shop's hours of operations?

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

Define microeconomics.

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

What is scarcity,and why is it a fundamental concept in economics?

The extra cost associated with undertaking an activity is called

The prime minister of the tiny island nation of Wowza has proposed that the speed limit on its only highway be reduced by 10 miles per hour on Thursdays.Enacting this proposal would be optimal

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

Selling tickets to graduation ceremonies has long been a tradition among students at institutions that limit the number of guests.Suppose your classmate,Heidi,purchased two tickets for $40 each.Is this transaction economically efficient?

Table 1-4 Hours Open Total Revenue (dollars) 1 \ 35 2 60 3 80 4 92 5 100 6 105 Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. -Refer to Table 1-4.Using marginal analysis,how many hours should Eva extend her bakery's hours of operations?

Voluntary exchange increases economic efficiency

In economics,the term ________ refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

One reason some manufacturing companies have moved production from overseas locations back to the United States is an increasing preference by U.S.consumers for products made in the United States.If buyers have increased their preference for domestically produced goods and manufacturers believe they can increase revenues by supplying more of these goods,firms are following which key economic idea when they return production to the United States?

When voluntary exchange takes place,both parties gain from the exchange.

All of the following are part of an economic model except

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

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What is her marginal benefit if she sells the quilt "as is" now?

What is a market economy?

A primary role of ________ is to describe how choices are made,analyze the results of those choices,and advise on how better decisions can be made.