Exam 1: Economics: Foundations and Models

The relationship between sales and revenue is

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish,because failure to do this could ________ the efficiency of the system by producing some goods and services that are ________.

Scenario 1-1 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 1-1.Had the firm not produced and sold the last 400 t-shirts,would its profit be higher or lower,and if so by how much?

What is a market economy?

The government makes all economic decisions in a centrally planned economy.

What is an economic market?

Table 1-1 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 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 1-1.Using marginal analysis,determine how many hours should Eva extend her bakery's hours of operations?

What is the "reverse causality" problem in determining cause and effect?

In the market for factors of production,households earn income by supplying factors of production to firms.

You explain to your friend Haslina,who runs a catering service called "Meals in a Zip",about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices.She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales.How would you respond to Haslina?

If a straight line passes through the point x = 12 and y = 4 and also through the point x = 4 and y = 8,the slope of this line is

According to census figures,between 1970 and 2007 the number of doctors who described themselves as self-employed

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

Dr.Goldfinger decides to invest in companies which he believes can "improve the productivity and efficiency" of health care services.What would Dr.Goldfinger need to do to try to achieve allocative efficiency?

Which of the following is motivated by an equity concern?

Economists assume that

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

What is the difference between physical capital and human capital?

In a market economy,those who are willing and able to buy what is produced

In a market economy,________ interact in markets to decide the answers to the fundamental economic questions.