Exam 1: Economics: Foundations and Models

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

Table 1-4 Hours Open Total Revenue (dollars) 1 \ 35 2 60 3 80 4 92 5 100 6 105 Eva runs a small bakery in the village of Roggerli.She is debating whether she should extend her hours of operation.Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above.She would have to hire a worker for those hours at a wage rate of $12 per hour. -Refer to Table 1-4.What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour?

When Dr.Goldfinger decides on the companies in which he will invest,a ________ issue is being addressed.

Selling tickets to graduation ceremonies has long been a tradition among students at institutions that limit the number of guests.Suppose your classmate,Heidi,purchased two tickets for $40 each.Is this transaction economically efficient?

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

At a recent company meeting,Geraldine Erwin,sales manager of Dastoria,a flavored-beverage producer announced,"We have increased our sales by 8 percent in just six months." Suppose six months ago,its sales amounted to $452,000,what is the value of its sales today?

What is an economic market?

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

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets,and therefore choose to invest in foreign markets.By using all available information as they act to achieve their goals,these investors are exemplifying the economic idea that

Which of the following is a microeconomics question?

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal cost.

What is a household? How do households interact with firms in a market?

Which of the following is a positive economic statement?

Define macroeconomics.

The decision about what goods and services will be produced in a centrally planned economy is made by

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

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

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

Article Summary Recent studies about wealth inequality and income inequality indicate that the American public's estimates of the distribution of wealth and income are quite different than actual data suggests.With respect to wealth,the top 20 percent of households hold more than 84% and the bottom 40 percent hold less than 1%,yet the public's estimates were 59% and 9%,respectively.In terms of income inequality,the public estimated that the CEO-to-worker pay-ratio was 30-to-1,whereas data suggests the actual ratio is 354-to-1,up from 20-to-1 in the 1960s. President Obama has referred to economic inequality as "the defining challenge of our time," and although Americans seem to recognize that income and wealth gaps have widened,only 5 percent indicate that this inequality is a problem that needs to be addressed. -Refer to the Article Summary.The article discusses income inequality,and for some people this means a more equitable distribution of income is needed in the economy.Would an equitable distribution of income necessarily be the most efficient distribution of income?