Exam 1: Economics: Foundations and Models

Which of the following is motivated by an efficiency concern?

Voluntary exchange increases economic efficiency

In a market economy,who decides what goods and services will be produced?

All economic questions arise from the fact that resources are scarce.

Allocative efficiency is achieved when

Suppose that to move more people off the wait list for organ donations,surgeons and hospitals are developing a market for organ swapping.This is an example of a macroeconomics topic.

Policies based on normative economic ideas tend to increase economic efficiency and improve equity.

Which of the following is correct about the economic decisions consumers,firms,and the government have to make?

Economists assume that rational people

If a graph has a line that shows the quantity of flat-screen televisions sold in the last five years,it is known as

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.What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour?

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 should she do?

Tabitha shares a flea market booth with her sister.Her share of the rent is $150 per month.She is considering moving to her own,larger booth which she will not have to share with anyone.The larger booth rents for $450 per month.Recently,you ran into Tabitha in the grocery store and she tells you that she has rented the larger booth.Tabitha is as rational as any other person.As an economics major,you rightly conclude that

The term "market" refers only to trading arrangements that have been approved by the government.

Consider the following statements: a.Consumers rent more DVDs from a video store that rents DVDs at a lower price than other rival video stores in the area. B.Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. C.Farmers produce more cotton when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives?

The basic economic problem of scarcity

Fast food restaurants produce a range of menu items such as hamburgers,chicken sandwiches,salads,and french fries.What fundamental economic question are they addressing by offering this range of items?

The study of economics arises due to

Which of the following is a microeconomics question?

Figure 1-3 -Refer to Figure 1-3.Calculate the area of the trapezoid X.