Exam 1: Economics: Foundations and Models

Consider the following economic agents: a.the government b.consumers c.producers Who,in a market economy,decides what goods and services will be produced with the scarce resources available in that economy?

The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomics topic.

The extra cost associated with undertaking an activity is called

Damian shares a small food truck with his sister.His share of the expenses is $500 per month.He has decided to get his own,newer food truck which he will not have to share with anyone.His expenses for the newer truck are $1400 per month.Damian is as rational as any other person.As an economics major,you rightly conclude that

When production reflects consumer preferences,________ occurs.

The branch of economics which studies how households and firms interact in markets is called

'The distribution of income should be determined by the government' is an example of a positive economic statement.

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.

An economic ________ is a simplified version of some aspect of economic life used to analyse an economic issue.

The branch of economics which studies the behaviour of entire economies is called

If the price of milk was $2.50 a litre and it is now $3.25 a litre,what is the percentage change in price?

All centrally planned economies

Consider the following statements: a.Car owners purchase more petrol from a petrol station that sells petrol at a lower price than other rival petrol stations in the area. b.Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c.Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives?

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.Petrol prices b.Unemployment c.Inflation d.Health care costs e.Air pollution f.Economic growth

What is an economic variable?

Marginal analysis involves undertaking an activity

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

Even if the population declines,scarcity will still exist.

All of the following are part of an economic model except

What is the 'omitted variable' problem in determining cause and effect?