Exam 1: Economics: Foundations and Models

When production reflects consumer preferences,________ occurs.

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.Had the firm not produced and sold the last 300 hats,would its profit be higher or lower,and by how much?

Mrs.Lovejoy decides to invest in companies which she believes can produce their goods at the lowest possible cost.Mrs.Lovejoy is investing in companies that are

How are the fundamental economic decisions determined in North Korea?

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. -Lionel's Lawn Care is a company that maintains residential yards.Lionel's cost for his standard What is Lionel's marginal benefit if he sells the standard package?

What is equity,and how does it differ from efficiency?

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 revenue received from the sale of the last 400 t-shirts?

You explain to your friend Haslina,who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices.She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales.How would you respond to Haslina?

Consider the following statements: A.Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach. B.Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. C.Farmers produce more cotton when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives?

Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."

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 the marginal cost of completing the task?

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. -Should Lionel continue to offer the shrub-trimming service?

Which of the following is a positive economic statement?

Which of the following is a normative economic statement?

Table 1-3 Extra Hours Open Total Revenue (dollars) 1 \ 70 2 120 3 160 4 184 5 200 6 210 Santiago runs a comic book store in the town of East Arbor.He is debating whether he should extend his hours of operation.Santiago figures that his sales revenue will depend on the number of extra hours the store is open as shown in the table above.He would have to hire a worker for those extra hours at a wage rate of $18 per hour. -Refer to Table 1-3.What is Santiago's marginal benefit if he decides to stay open for an extra two hours instead of one hour?

Trinh quits his $80,000-a-year job to become a full-time volunteer at a museum.What is the opportunity cost of his decision?

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

When Mr.Peabody decides on the companies to which he will donate his time and money,a ________ issue is being addressed.

If the price of pineapple juice was $4.50 a gallon and it is now $5.75 a gallon,what is the percentage change in price?

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that