Question 1

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

Accepted Answer

Productive efficiency is an efficiency c

Question 2

Technological progress has made it possible for firms such as Apple and Alivecor to develop small electronic devices,including smartwatches,smartphones,and products that can be attached to the smartwatches and smartphones,to serve consumers who have become more health conscious and wish to monitor various health conditions.These firms are reacting to which of the three key economic ideas?

Accepted Answer

A) Firms attempt to maximize revenues. 
B) Optimal decisions are made at the margin. 
C) People are rational. 
D) People respond to economic incentives. 
A) Firms attempt to maximize revenues. 
B) Optimal decisions are made at the margin. 
C) People are rational. 
D) People respond to economic incentives.

Question 3

When goods and services are produced at the lowest possible cost,________ occurs.

Accepted Answer

A) allocative efficiency 
B) productive efficiency 
C) equity 
D) efficient central planning 
A) allocative efficiency 
B) productive efficiency 
C) equity 
D) efficient central planning

Question 4

________ 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.

Accepted Answer

A) Competition 
B) Voluntary exchange 
C) Equity 
D) A centrally planned economy 
A) Competition 
B) Voluntary exchange 
C) Equity 
D) A centrally planned economy

Question 5

The ________ the sale of an additional unit of a product is a marginal benefit to the firm.

Accepted Answer

A) revenue received from 
B) extra cost of 
C) total value of 
D) sales tax on 
A) revenue received from 
B) extra cost of 
C) total value of 
D) sales tax on

Question 6

What is a mixed economy?

Accepted Answer

A mixed economy is an economy in which m

Question 7

Which of the following statements about economic resources is true?

Accepted Answer

A) Economic resources include financial capital and money. 
B) Economic resources are also called factors of production. 
C) Economic resources are used only by businesses. 
D) All economic resources are man-made. 
A) Economic resources include financial capital and money. 
B) Economic resources are also called factors of production. 
C) Economic resources are used only by businesses. 
D) All economic resources are man-made.

Question 8

Optimal decisions are made at the point where marginal benefit is maximized.

Accepted Answer

A) True 
 B)False

Question 9

The revenue received from the sale of an additional unit of a product

Accepted Answer

A) is a marginal benefit to the firm. 
B) is called profit. 
C) is called gross sales. 
D) is called a net gain. 
A) is a marginal benefit to the firm. 
B) is called profit. 
C) is called gross sales. 
D) is called a net gain.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statements about positive economic analysis is true?

Accepted Answer

A) Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. 
B) There is much less disagreement among economists over normative economic analysis than over positive economic analysis. 
C) There is much more disagreement among economists over positive economic analysis than over normative economic analysis. 
D) Unlike positive economic analysis,normative economic analysis can be tested. 
A) Positive analysis uses an economic model to estimate the costs and benefits of different course of actions. 
B) There is much less disagreement among economists over normative economic analysis than over positive economic analysis. 
C) There is much more disagreement among economists over positive economic analysis than over normative economic analysis. 
D) Unlike positive economic analysis,normative economic analysis can be tested.

Question 12

Scenario 1-4
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes,"Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000,we are only making an overall profit of $3,000 per week so I think we need to cut back on production.
-Refer to Scenario 1-4.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 500 cigars?

Accepted Answer

A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct. 
A) marginal cost 
B) operating cost 
C) explicit cost 
D) Any of the above terms are correct.

Question 13

The Coffee Nook,a small cafe near campus,sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each
-What is the opportunity cost of buying a Russian tea cake?

Accepted Answer

A) 2 1/2 cappuccinos 
B) 2/5 of a cappuccino 
C) $2.50 
D) $1.00 
A) 2 1/2 cappuccinos 
B) 2/5 of a cappuccino 
C) $2.50 
D) $1.00

Question 14

In 2015,Hooverville consumed 205,000 tons of sugar.In 2016,sugar consumption rose to 245,000 tons.Calculate the percentage change in sugar consumption.

Accepted Answer

A) 8.37% 
B) 11.95% 
C) 19.51% 
D) 26.33% 
A) 8.37% 
B) 11.95% 
C) 19.51% 
D) 26.33%

Question 15

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

Accepted Answer

A) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect. 
B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. 
C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. 
D) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect. 
A) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect. 
B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. 
C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. 
D) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect.

Question 16

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.
-Should DeShawn continue to offer the engine detailing service?

Accepted Answer

A) Yes,he still makes a profit by selling the engine detailing service with the basic detailing package. 
B) yes,but only if he raises the price of the basic detailing package 
C) No,his marginal benefit is less than his marginal cost. 
D) More information is needed for DeShawn to make this decision. 
A) Yes,he still makes a profit by selling the engine detailing service with the basic detailing package. 
B) yes,but only if he raises the price of the basic detailing package 
C) No,his marginal benefit is less than his marginal cost. 
D) More information is needed for DeShawn to make this decision.

Question 17

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Accepted Answer

A) $31,850 
B) $207,638 
C) $276,850 
D) $359,905 
A) $31,850 
B) $207,638 
C) $276,850 
D) $359,905

Question 18

Which of the following is a microeconomics question?

Accepted Answer

A) How much will be saved and how much will be produced in the entire economy? 
B) What will the level of economic growth be in the entire economy? 
C) What factors determine the price of carrots? 
D) What determines the average price level and inflation? 
A) How much will be saved and how much will be produced in the entire economy? 
B) What will the level of economic growth be in the entire economy? 
C) What factors determine the price of carrots? 
D) What determines the average price level and inflation?

Question 19

According to the Centers for Disease Control and Prevention,________ in 2013 in which less than 20 percent of the population was considered obese.

Accepted Answer

A) Colorado was the only state 
B) there were only 5 states 
C) there were more than 25 states 
D) there were no states 
A) Colorado was the only state 
B) there were only 5 states 
C) there were more than 25 states 
D) there were no states

Question 20

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?

Accepted Answer

A) 7.1 percent 
B) 13.3 percent 
C) 15.4 percent 
D) 33.3 percent 
A) 7.1 percent 
B) 13.3 percent 
C) 15.4 percent 
D) 33.3 percent

Exam 1: Economics: Foundations and Models

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

When goods and services are produced at the lowest possible cost,________ occurs.

________ 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.

The ________ the sale of an additional unit of a product is a marginal benefit to the firm.

What is a mixed economy?

Which of the following statements about economic resources is true?

Optimal decisions are made at the point where marginal benefit is maximized.

The revenue received from the sale of an additional unit of a product

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

Which of the following statements about positive economic analysis is true?

The Coffee Nook,a small cafe near campus,sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each -What is the opportunity cost of buying a Russian tea cake?

In 2015,Hooverville consumed 205,000 tons of sugar.In 2016,sugar consumption rose to 245,000 tons.Calculate the percentage change in sugar consumption.

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

At a recent company meeting,Ravi Batra,sales manager of Life's a Beach,a surfboard producer announced,"We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago,its sales amounted to $245,000,what is the value of its sales today?

Which of the following is a microeconomics question?

According to the Centers for Disease Control and Prevention,________ in 2013 in which less than 20 percent of the population was considered obese.

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?

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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