Exam 1: Economics: Foundations and Models

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

The machines workers have to work with are considered

DeShawn's Detailing is a service that details cars at the customers' homes or places of work.DeShawn's cost for a basic detailing package is $40,and he charges $75 for this service.For a total price of $90,DeShawn will also detail the car's engine,a service that adds an additional $20 to the total cost of the package.What is DeShawn's marginal benefit if he sells a basic detailing package?

Which of the following correctly describes the relationship between economic efficiency and economic equity?

In economics,the term ________ means "additional" or "extra."

Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Pookie's Pinball Palace restores old Pinball machines.Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration.After having spent $300,Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration.Alternatively,he can sell the machine "as is" now for $1,000.What should he do?

What is an economic variable?

Suppose the extra cost to a doctor of keeping his office open on Saturdays is $1,200.Then,the doctor should stay open on Saturdays if keeping the office open brings in additional revenue of $1,200 or more.

What is an economic model?

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. -Refer to Table 1-2.What is Thuy Anh's marginal benefit if she decides to stay open for three hours instead of two hours?

Allocative efficiency is achieved when firms produce goods and services

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

Scarcity is a problem that will eventually disappear as technology advances.

Macroeconomics is the study of

Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."

What is opportunity cost?

Article Summary In an August 2013 speech from the Lincoln Memorial, President Obama was expected to emphasize that increased economic equality is needed to improve racial equality. Economic gaps based on race have endured for 50 years, with the differences in unemployment rates between blacks and whites remaining virtually unchanged and the gap in wealth actually increasing. "If you look at 50 years after the 1960s civil rights movement, the most stubborn and persistent challenge when it comes to the nation's racial challenge remains in the areas of economics and wealth," said Marc Morial, president of the National Urban League. Source: Zachary A. Goldfarb, "For Obama, 50 years after historic march, economic equality the path to racial justice," Washington Post, August 17, 2013. -Refer to the Article Summary.The article mentions increased economic equality is needed in terms of wealth,and for some people this means a more equitable distribution of wealth.Would an equitable distribution of wealth necessarily be the most efficient distribution of wealth?

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

________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables.