Question 1

Figure 1-3  
-Refer to Figure 1-3.Calculate the area of the trapezoid X.

Accepted Answer

A) $270 
B) $720 
C) $810 
D) $2,520 
A) $270 
B) $720 
C) $810 
D) $2,520

Question 2

Consider the following economic agents:
A.the government
B.consumers
C.producers
Who,in a centrally planned economy,decides what goods and services will be produced with the scarce resources available in that economy?

Accepted Answer

A) the government 
B) producers 
C) consumers 
D) consumers and producers 
E) the government,consumers,and producers 
A) the government 
B) producers 
C) consumers 
D) consumers and producers 
E) the government,consumers,and producers

Question 3

Markets promote

Accepted Answer

A) equity and competition. 
B) voluntary exchange and equality. 
C) equity and equality. 
D) competition and voluntary exchange. 
A) equity and competition. 
B) voluntary exchange and equality. 
C) equity and equality. 
D) competition and voluntary exchange.

Question 4

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.

Accepted Answer

A) market 
B) trade-off 
C) variable 
D) model 
A) market 
B) trade-off 
C) variable 
D) model

Question 5

When voluntary exchange takes place,neither party gains from the exchange.

Accepted Answer

A) True 
 B)False

Question 6

In a market economy,who decides what goods and services will be produced?

Accepted Answer

A) only the producers 
B) only consumers 
C) consumers and producers 
D) the government 
A) only the producers 
B) only consumers 
C) consumers and producers 
D) the government

Question 7

Opportunity cost is defined as

Accepted Answer

A) the benefit of an activity. 
B) the monetary expense associated with an activity. 
C) the highest valued alternative that must be given up to engage in an activity. 
D) the total value of all alternatives that must be given up to engage in an activity. 
A) the benefit of an activity. 
B) the monetary expense associated with an activity. 
C) the highest valued alternative that must be given up to engage in an activity. 
D) the total value of all alternatives that must be given up to engage in an activity.

Question 8

Examining the conditions that could lead to unemployment in an economy is an example of a microeconomic topic.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is part of an economic model?

Accepted Answer

A) norms 
B) hypotheses 
C) opinions 
D) preferences of economic agents 
A) norms 
B) hypotheses 
C) opinions 
D) preferences of economic agents

Question 10

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?

Accepted Answer

A) The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents. 
B) The student is using an inadequate sample size. 
C) The student is drawing a false conclusion;he is confusing cause and effect. 
D) The student has failed to take into account other causes of gray hair. 
A) The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents. 
B) The student is using an inadequate sample size. 
C) The student is drawing a false conclusion;he is confusing cause and effect. 
D) The student has failed to take into account other causes of gray hair.

Question 11

Trade-offs force society to make choices when answering what three fundamental questions?

Accepted Answer

1.What goods and services will

Question 12

The highest valued alternative that must be given up to engage in an activity is the definition of

Accepted Answer

A) economic equity. 
B) marginal benefit. 
C) opportunity cost. 
D) marginal cost. 
A) economic equity. 
B) marginal benefit. 
C) opportunity cost. 
D) marginal cost.

Question 13

An office supply store sells a ream of printer paper at a fixed price of $4.50.Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper?

Accepted Answer

A) marginal revenue 
B) gross earnings 
C) pure profit 
D) marginal costs 
E) net benefit 
A) marginal revenue 
B) gross earnings 
C) pure profit 
D) marginal costs 
E) net benefit

Question 14

Pookie's Pinball Palace restores old Pinball machines.Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration.After having spent $300,Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration.Alternatively,he can sell the machine "as is" now for $1,000.
-What should he do?

Accepted Answer

A) He should sell the machine now to make the most profit. 
B) It does not matter what he does;he is going to take a loss on his project. 
C) He should rewire the machine,complete the task and then sell the machine. 
D) He should have never purchased the machine because he has already spent too much time on it and has not been paid for that time. 
A) He should sell the machine now to make the most profit. 
B) It does not matter what he does;he is going to take a loss on his project. 
C) He should rewire the machine,complete the task and then sell the machine. 
D) He should have never purchased the machine because he has already spent too much time on it and has not been paid for that time.

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

What are the five steps by which economists arrive at a useful economic model?

Accepted Answer

1.Decide on the assumptions to use in de

Question 17

Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Accepted Answer

A) True 
 B)False

Question 18

Table 1-4
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Hours } \
\text { Open }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (dollars) }
\end{array} \
\hline 1 & \$ 35 \
\hline 2 & 60 \
\hline 3 & 80 \
\hline 4 & 92 \
\hline 5 & 100 \
\hline 6 & 105 \
\hline
\end{array}$$ 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 cost if she decides to stay open for two hours instead of one hour?

Accepted Answer

A) $12 
B) $24 
C) $36 
D) $71 
A) $12 
B) $24 
C) $36 
D) $71

Question 19

Which of the following is a normative economic statement?

Accepted Answer

A) The price of gasoline is too high. 
B) The current high price of gasoline is the result of strong worldwide demand. 
C) When the price of gasoline rises,the quantity of gasoline purchased falls. 
D) When the price of gasoline rises,transportation costs rise. 
A) The price of gasoline is too high. 
B) The current high price of gasoline is the result of strong worldwide demand. 
C) When the price of gasoline rises,the quantity of gasoline purchased falls. 
D) When the price of gasoline rises,transportation costs rise.

Question 20

Even if the population declines,scarcity will still exist.

Accepted Answer

A) True 
 B)False

Exam 1: Economics: Foundations and Models

Figure 1-3 -Refer to Figure 1-3.Calculate the area of the trapezoid X.

Consider the following economic agents: A.the government B.consumers C.producers Who,in a centrally planned economy,decides what goods and services will be produced with the scarce resources available in that economy?

Markets promote

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.

When voluntary exchange takes place,neither party gains from the exchange.

In a market economy,who decides what goods and services will be produced?

Opportunity cost is defined as

Examining the conditions that could lead to unemployment in an economy is an example of a microeconomic topic.

Which of the following is part of an economic model?

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?

Trade-offs force society to make choices when answering what three fundamental questions?

The highest valued alternative that must be given up to engage in an activity is the definition of

An office supply store sells a ream of printer paper at a fixed price of $4.50.Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper?

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

What are the five steps by which economists arrive at a useful economic model?

Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

Which of the following is a normative economic statement?

Even if the population declines,scarcity will still exist.

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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