Exam 1: Economics: Foundations and Models

Table 1-2 Thuy Anh runs a small flower shop in the town of Florabunda. She is debating whether she should extend her hours of operation. Thuy Anh figures that her sales revenue will depend on the number of hours the flower shop is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $16 per hour. -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 determined by the government" is an example of a normative economic statement.

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________.

Which of the following best describes an assumption economists make about human behavior?

Table 1-1 Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour. -Refer to Table 1-1. What is Lydia's marginal benefit if she decides to stay open for two hours instead of one hour?

Normative analysis is concerned with "what ought to be," while positive analysis is concerned with "what is."

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

Opportunity cost is defined as

Ted quits his $60,000-a-year job to be a stay-at-home dad. What is the opportunity cost of his decision?

Figure 1-4 -Refer to Figure 1-4. Which of the following statements is true?

The government makes all economic decisions in a mixed economy.

Table 1-6 Ivan runs a custom jewelry shop in Sparkle City. He is debating whether he should extend his hours of operation. Ivan figures that his sales revenue will depend on the number of hours the jewelry shop is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $25 per hour. -Scarcity is a problem that will eventually disappear as technology advances.

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.

Optimal decisions are made at the point where marginal benefit is maximized.

Which of the following statements is false?

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 is her marginal benefit if she sells the quilt "as is" now?

What is an economic market?

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?

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?

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