Exam 1: Economics: Foundations and Models

Which of the following is a normative economic statement?

Since 1994,obesity rates in the United States

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish,because failure to do this could ________ the efficiency of the system by producing some goods and services that are ________.

In a market economy,those who are willing and able to buy what is produced

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

Examining the conditions that could lead to economic growth is an example of a macroeconomics topic.

Which of the following is a normative economic statement?

In the market for factors of production,firms earn income by selling factors of production to households.

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

Scenario 1-3 Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes,"Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800,we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts." -Refer to Scenario 1-3.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 400 t-shirts?

Which of the following statements about the economic decisions consumers,firms,and the government have to make is false?

Which of the following is part of an economic model?

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 wealth inequality,and for some people this means a more equitable distribution of wealth is needed in the economy.What is meant by a more equitable distribution of wealth?

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

The idea that because of scarcity,producing more of one good or service means producing less of another good or service refers to the economic concept of

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 revenue received from the sale of the last 500 cigars?

Which of the following is a macroeconomics question?

In a centrally planned economy,the households and firms decide how economic resources will be allocated.

Which of the following statements is false?

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?