Exam 1: Economics: Foundations and Models

Scenario 1-3 Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts." -Refer to Scenario 1-3.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 400 t-shirts?

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

The Coffee Nook,a small cafe near campus,sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a Russian tea cake?

Which of the following is a macroeconomic question?

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

More chief executive officers of Fortune 500 companies majored in economics than in any other subject.

Which of the following is a positive economic statement?

The cost incurred from the production of an additional unit of a product

The term "market" refers to trading arrangements by which buyers and sellers come together.

Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Two-dimensional graphs have a horizontal and a vertical axis and are used in economics to illustrate

Table 1-3 Extra Hour: Open Total Revenue (dollars) 1 \ 70 2 120 3 160 4 184 5 200 6 210 Santiago runs a comic book store in the town of East Arbor. He is debating whether he should extend his hours of operation. Santiago figures that his sales revenue will depend on the number of extra hours the store is open as shown in the table above. He would have to hire a worker for those extra hours at a wage rate of $18 per hour. -Refer to Table 1-3.What is Santiago's marginal benefit if he decides to stay open for an extra two hours instead of one hour?

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.Would an equitable distribution of income necessarily be the most efficient distribution of income?

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.Unemployment would be lower without a minimum wage law. C.Minimum wage laws benefit some workers and harm others. D.The minimum wage should be more than $7.25 per hour. Which of the consequences above are positive statements and which are normative statements?

Which of the following statements is true?

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

What is a marginal cost?

Suppose the U.S.government encouraged consumers to trade in their old automobiles for more efficient,new models by paying up to $5,000 for the old automobiles.These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that

If the price of milk was $1.25 a gallon and it is now $2.25 a gallon,what is the percentage change in price?

What are the five steps by which economists arrive at a useful economic model?