Exam 1: Economics: Foundations and Models

Explain the difference between a firm's revenue and its profit.

Which of the following statements about economic resources is true?

The government makes all economic decisions in a mixed economy.

Which of the following is a result of a market economy?

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

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

The economic analysis of minimum wage involves both normative and positive analysis.Consider the following consequences of a minimum wage: a.The minimum wage law causes unemployment. b.A minimum wage law benefits some groups and hurts others. c.In some cities such as San Francisco and New York,it would be impossible for low-skilled workers to live in the city without minimum wage laws. d.The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses. Which of the consequences above are positive statements and which are normative statements?

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

Which of the following is a positive economic statement?

A college must decide if it wants to offer more Internet-based classes.This decision involves answering the economic question of "what to produce."

Which of the following is a normative economic statement?

Mr.Peabody chooses to invest in companies that produce goods and services based on consumer preferences.Mr.Peabody is investing in companies that are attempting to be

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?

List the five main factors of production.

Table 1-3 Santiago runs a comic book store in the town of East Arbor. He is debating whether he should extend his hours of operation. Santiago figures that his sales revenue will depend on the number of hours the store is open as shown in the table above. He would have to hire a worker for those hours at a wage rate of $18 per hour. -Refer to Table 1-3.What is Santiago's marginal benefit if he decides to stay open for two hours instead of one hour?

When production reflects consumer preferences,________ occurs.

Recent changes occurring within the U.S.health care system,including lower insurance reimbursement rates,have resulted in

Table 1-4 -Refer to Table 1-4.The table above shows the sales of DVD recorders in North America.Present the information using a bar graph.

Productive efficiency is achieved when

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?