Exam 1: Economics: Foundations and Models

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.Would an equitable distribution of wealth necessarily be the most efficient distribution of wealth?

Lionel's Lawn Care is a company that maintains residential yards.Lionel's cost for his standard package of mowing,edging,and trimming is $15,and he charges $25 for this service.For a total price of $40,Lionel will also trim shrubs,a service that adds an additional $10 to the total cost of the standard package. -What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?

The relationship between consumer spending and disposable personal income is

Which of the following is an example of a "how much" decision?

Which of the following is an example of an economic trade-off that a firm has to make?

"An increase in the price of oranges will increase the demand for grapefruits." This statement is an example of a normative economic statement.

Which of the following generates productive efficiency?

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900. -What should she do?

Which of the following contributes to the efficiency of markets?

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a.college tuition rates b.farm subsidies c.national income d.automobile prices e.air traffic congestion f.economic recession

Which of the following is a normative economic statement?

If the marginal cost for Dinky's Donuts to advertise one additional day each week in the local newspaper is $200,then Dinky's Donuts should advertize that additional day

An "omitted variable" is

In 2015,Smileytown consumed 12,000 gallons of mouthwash.In 2016,mouthwash consumption rose to 17,000 gallons.Calculate the percentage change in mouthwash consumption.

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 1-2.Using marginal analysis terminology,another economic term for the incremental revenue received from the sale of the last 300 hats is

Which of the following generates allocative efficiency in a market economy?

Which of the following is an example of a "how much" decision?

What is a marginal cost?

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

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900. -What is her marginal benefit if she sells the quilt "as is" now?