Exam 1: Economics: Foundations and Models

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

In a centrally planned economy,the households and firms decide how economic resources will be allocated.

When every good or service is produced up to the point where the last unit provides ________,allocative efficiency occurs.

A restaurant sells a large soft drink at a fixed price of $1.79.A term used by economists to describe the money received from the sale of an additional large soft drink is

'The distribution of income should be left to the market' is an example of a positive economic statement.

How are the fundamental economic questions answered in a market economy?

What is an economic variable?

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

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.

Define microeconomics.

The government makes all economic decisions in a mixed economy.

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

Trina's Tropical Fish Store sells goldfish for $2 each and angelfish for $10 each.What is the opportunity cost of buying a goldfish?

Assume that a doctor can earn an additional $20 000 of revenue each year from keeping his office open for one additional hour per week.What must the additional cost of keeping the office open this additional hour per week be to make staying open for the extra hour economically rational?

If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16,the slope of this line is

Which of the following is part of an economic model?

________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

All centrally planned economies

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