Exam 1: Economics: Foundations and Models

Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. Should Lionel continue to offer the shrub-trimming service?

One example of human capital is the amount of skills that you have.

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. -If the marginal cost of keeping a doctor's office open one additional hour per day is $200, then the doctor should keep the office open for one extra hour

Scenario 1-2 Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of $5,000 per week. The plant owner observes, "Although the last 300 hats we produced and sold increased our revenue by $1,000 and our costs by $1,100, 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 hats." -Refer to Scenario 1-1. Using marginal analysis terminology, another economic term for the incremental revenue received from the sale of the last 300 hats is

Which of the following are positive economic statements and which are normative economic statements? a. An increase in the price of gasoline will decrease the quantity of gasoline purchased.. b. The government should eliminate the minimum wage. c. All states should raise the minimum wage to at least $10 per hour. d. The government should scrap its current income tax structure in favor of a flat tax. e. Unemployment has increased since the onset of the recession. f. The government should not bail out investment banks during a financial crisis.

Figure 1-1 -Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2008 and 2011.

Voluntary exchange increases economic efficiency

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

The cost incurred from the production of an additional unit of a product

Every society faces trade-offs. Explain the concept of trade-offs.

What is a marginal benefit?

Examining the conditions that could lead to inflation in an economy is an example of microeconomics topic.

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

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

If the price of gasoline was $3.25 a gallon and it is now $3.75 a gallon, what is the percentage change in price?

Which of the following is a problem inherent in centrally planned economies?

One example of physical capital is the amount of savings that you have.

Explain the economic idea that "people respond to incentives."

A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

By definition, economics is the study of