Exam 1: Economics: Foundations and Models

When voluntary exchange takes place,neither party gains from the exchange.

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 $1,400 per month.Damian is as rational as any other person.As an economics major,you rightly conclude that

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 the marginal cost of adding the engine detailing to the basic detailing package?

Which of the following is a normative economic statement?

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain.

________ is a situation in which a good or service is produced at the lowest possible cost.

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 cost if she decides to stay open for three hours instead of two hours?

By definition,economics is the study of

According to census figures and the Congressional Budget Office,the number of people aged 65 and older is projected to ________ and the number of uninsured people is projected to ________ by the year 2020.

What is voluntary exchange?

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 2007 and 2011.

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.Using marginal analysis,how many hours should Thuy Anh extend her flower shop's hours of operations?

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

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

Economists assume that individuals

You explain to your roommate Surya,who makes beaded headbands,about an economic theory which asserts that consumers will purchase more of a product at lower prices than they will at higher prices.She contends that the theory is incorrect because over the past two years she has lowered the price of her headbands and yet has seen a decrease in sales.How would you respond to Surya?

Suppose when the price of laptops fall,college students buy more laptops.This implies that

Which of the following is a positive economic statement?

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

What is a firm? What other terms do economists use interchangeably with the term "firm"?