Question 1

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

Accepted Answer

A firm's revenue is the total amount rec

Question 2

Which of the following statements about economic resources is false?

Accepted Answer

A) Economic resources include financial capital and money. 
B) Economic resources are also called factors of production. 
C) Economic resources are used to produce goods and services. 
D) Some economic resources are human-made while others are found in nature. 
A) Economic resources include financial capital and money. 
B) Economic resources are also called factors of production. 
C) Economic resources are used to produce goods and services. 
D) Some economic resources are human-made while others are found in nature.

Question 3

Which of the following are positive economic statements and which are normative economic statements?
a.An increase in the minimum wage causes unemployment.
b.The government should raise the minimum wage above $7.25 per hour.
c.The prolonged recession has caused the unemployment rate to reach a 30-year high.
d.Interest rates need to be lower for the economy to emerge from the recession.
e.Inflation has decreased since the onset of the recession.
f.Once the recession has ended,interest rates should increase to assure that inflation does not go up.

Accepted Answer

Statements a,c,and e are posit

Question 4

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________,meaning they make the best decisions given their knowledge of the costs and benefits.

Accepted Answer

A) equitably 
B) rationally 
C) emotionally 
D) selfishly 
A) equitably 
B) rationally 
C) emotionally 
D) selfishly

Question 5

The cost incurred from the production of an additional unit of a product

Accepted Answer

A) is a marginal cost to the firm. 
B) is called a loss. 
C) is called opportunity cost. 
D) must be zero for a firm to be efficient. 
A) is a marginal cost to the firm. 
B) is called a loss. 
C) is called opportunity cost. 
D) must be zero for a firm to be efficient.

Question 6

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

Accepted Answer

A) macroeconomics. 
B) microeconomics. 
C) positive economics. 
D) normative economics. 
A) macroeconomics. 
B) microeconomics. 
C) positive economics. 
D) normative economics.

Question 7

In the United States in 2012,the number of new,diagnosed diabetes cases was highest for people in the age range of ________,and the rate of new diabetes cases per 1,000 people was highest for people in the age range of ________.

Accepted Answer

A) 20-44;45-64 
B) 45-64;65 and older 
C) 45-64;45 - 64 
D) 65 and older;20-44 
A) 20-44;45-64 
B) 45-64;65 and older 
C) 45-64;45 - 64 
D) 65 and older;20-44

Question 8

What is the difference between physical capital and human capital?

Accepted Answer

Physical capital includes manu

Question 9

Productive efficiency is achieved when

Accepted Answer

A) firms add a low profit margin to the goods and services they produce. 
B) firms produce the goods and services that consumers value most. 
C) firms produce goods and services at the lowest cost. 
D) there are no shortages or surpluses in the market. 
A) firms add a low profit margin to the goods and services they produce. 
B) firms produce the goods and services that consumers value most. 
C) firms produce goods and services at the lowest cost. 
D) there are no shortages or surpluses in the market.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Skeeter's Skeeball Castle has seen its business slow down ever since Kerrie's Off-Key Karaoke opened up next door.Since the opening of Kerrie's Off-Key Karaoke,the opportunity cost of playing skeeball at Skeeter's has

Accepted Answer

A) decreased. 
B) increased. 
C) fallen to zero. 
D) not changed. 
A) decreased. 
B) increased. 
C) fallen to zero. 
D) not changed.

Question 12

The government makes all economic decisions in a centrally planned economy.

Accepted Answer

A) True 
 B)False

Question 13

________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.

Accepted Answer

A) The omitted variable 
B) The positive-to-negative relationship 
C) Reverse causality 
D) Nonlinear slope 
A) The omitted variable 
B) The positive-to-negative relationship 
C) Reverse causality 
D) Nonlinear slope

Question 14

In economics,the total amount received for selling a good or service is referred to as

Accepted Answer

A) revenue. 
B) profit. 
C) capital gains. 
D) factor payments. 
A) revenue. 
B) profit. 
C) capital gains. 
D) factor payments.

Question 15

What is technology and what factors does it depend on?

Accepted Answer

Technology is the processes a firm uses

Question 16

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 cost of producing the last 300 hats is

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 17

Table 1-5
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Hours } \
\text { Open }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (dollars) }
\end{array} \
\hline 1 & \$ 40 \
\hline 2 & 65 \
\hline 3 & 80 \
\hline 4 & 90 \
\hline 5 & 95 \
\hline 6 & 98 \
\hline
\end{array}$$ Julius runs a small tailor shop in the city of Bloomfield.He is debating whether he should extend his hours of operation.Julius figures that his sales revenue will depend on the number of additional hours the tailor shop 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 1-5.What is Julius's marginal benefit if he decides to stay open for three hours instead of two hours?

Accepted Answer

A) $15 
B) $25 
C) $65 
D) $80 
A) $15 
B) $25 
C) $65 
D) $80

Question 18

What is the difference between accounting profit and economic profit?

Accepted Answer

Profit is the difference between revenue

Question 19

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.Had the firm not produced and sold the last 400 t-shirts,would its profit be higher or lower,and if so by how much?

Accepted Answer

A) Its profit would be $4,800 higher. 
B) Its profit would be $800 higher. 
C) Its profit would be $800 lower. 
D) Its profit would be $4,000 lower. 
A) Its profit would be $4,800 higher. 
B) Its profit would be $800 higher. 
C) Its profit would be $800 lower. 
D) Its profit would be $4,000 lower.

Question 20

The extra cost associated with undertaking an activity is called

Accepted Answer

A) net loss. 
B) marginal cost. 
C) opportunity cost. 
D) foregone cost. 
A) net loss. 
B) marginal cost. 
C) opportunity cost. 
D) foregone cost.

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 false?

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________,meaning they make the best decisions given their knowledge of the costs and benefits.

The cost incurred from the production of an additional unit of a product

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

In the United States in 2012,the number of new,diagnosed diabetes cases was highest for people in the age range of ________,and the rate of new diabetes cases per 1,000 people was highest for people in the age range of ________.

What is the difference between physical capital and human capital?

Productive efficiency is achieved when

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

Skeeter's Skeeball Castle has seen its business slow down ever since Kerrie's Off-Key Karaoke opened up next door.Since the opening of Kerrie's Off-Key Karaoke,the opportunity cost of playing skeeball at Skeeter's has

The government makes all economic decisions in a centrally planned economy.

________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact,it is a change in variable Y that caused a change in variable X.

In economics,the total amount received for selling a good or service is referred to as

What is technology and what factors does it depend on?

What is the difference between accounting profit and economic profit?

The extra cost associated with undertaking an activity is called

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

Filters

In the United States in 2012,the number of new,diagnosed diabetes cases was highest for people in the age range of ,and the rate of new diabetes cases per 1,000 people was highest for people in the age range of .