Exam 1: Economics: Foundations and Models

Soo Jin shares a one-bedroom apartment with her classmate.Her share of the rent is $700 per month.She is considering moving to a studio apartment which she will not have to share with anyone.The studio apartment rents for $950 per month.Recently, you ran into Soo Jin on campus and she tells you that she has moved into the studio apartment.Soo Jin is as rational as any other person.As an economics major, you rightly conclude that

Figure 1.2 Alt text for Figure 1.2: In figure 1.2, a graph used to calculate the area of the triangle A is shown. Long description for Figure 1.2: The x-axis is labelled with, quantity, in thousands of units, with 0 at the vertex, and point 80 marked midway on the axis.The y-axis is labelled, price, dollars per unit, with the points 10 and 75.A line, labelled, Demand, slopes downward from 75 on the y-axis, to the bottom right corner, near the end of the x-axis.Another line, labelled, Supply, slopes upward from 10 on the y-axis to the top right corner.Both these lines intersect at a point from which a vertical dotted line is drawn to point 80 on the x-axis.The area to the left of this intersection point, between the Demand and Supply curves, forms a triangle, and is shaded and labelled as, A. -Refer to Figure 1.2.Calculate the area of the triangle A.

Optimal decisions are made at the point where marginal cost equals zero.

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

A university must decide if it wants to offer more Internet-based classes.This decision involves answering the economic question of "what to produce."

List the five main factors of production.

If the price of milk was $2.50 a litre and it is now $3.25 a litre, what is the percentage change in price?

Consider the following economic agents: a.the government b.consumers c.producers Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?

What is the difference between positive economic analysis and normative economic analysis? Give one example each of a positive and normative economic issue or question or statement.

Which of the following is a result of a market economy?

If a graph has a line that shows the amount of outsourcing in the last ten years, it is known as

At a recent faculty meeting, Lorraine Waverly, president of Skywalker College, announced that enrollment is up by 12 percent over the previous semester.If enrollment the previous semester was 3,250 students, what is the student enrollment this semester?

Society faces a trade-off in all of the following situations except

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?

Microeconomics is the study of

What is meant by the statement that "optimal decisions are made at the margin"?

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

The relationship between consumer spending and disposable personal income is

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