Exam 1: Economics: Foundations and Models

Allison's Auto Art is a company that applies pinstripes to vehicles.Allison's cost for a basic 1-colour pinstriping job is $35,and she charges $95 for this service.For a total price of $175,Allison will apply a fancier 3-colour pinstripe to an automobile,a service that adds an additional $40 to the total cost of the package.What is the marginal cost of moving up from the 1-colour application to the 3-colour application?

The term ________ in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade.

The government makes all economic decisions in a market economy.

Define microeconomics.

Which of the following is part of an economic model?

________ 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.

Markets promote

Macroeconomics is the study of

An economic model is a simplified version of reality used to analyse real-world economic situations.

Economists reason that the optimal decision is to continue any activity up to the point where the

Mr.Peabody chooses to invest in companies that produce goods and services at the lowest possible cost.Mr.Peabody is investing in companies that are

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

Which of the following generates productive efficiency?

Trinh quits his $80 000-a-year job to become a full-time volunteer at a museum.What is the opportunity cost of his decision?

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

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

Which of the following statements is true about scarcity?

When voluntary exchange takes place,both parties gain from the exchange.

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

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