Exam 1: Economics: Foundations and Models

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

How are the fundamental economic decisions determined in Canada?

Consider the following statements: a.Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area. B.Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment. C.Manufacturers produce less of a particular cell phone when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives?

Economic models

The Stogie Shop,a cigar store in the mall,sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each.What is the opportunity cost of buying a hand-rolled cigar?

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?

When goods and services are produced at the lowest possible cost,________ occurs.

The branch of economics which studies how households and firms make choices,interact in markets,and how government attempts to influence their choices is called

Productive efficiency is achieved when firms produce goods and services

The Farm Factory,a booth at the local Farmer's Market,sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon.What is the opportunity cost of buying a gallon of milk?

What is an economic model?

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

In economics,activities done for others,such as providing house cleaning or dental work,are referred to as

What is the difference between accounting profit and economic profit?

In economics,the difference between a firm's revenues and its costs is referred to as

When voluntary exchange takes place,only one party gains from the exchange.

Suppose the U.S.government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus.These teachers would be exemplifying the economic idea that

The economic analysis of minimum wage involves both normative and positive analysis.Consider the following consequences of a minimum wage: a.The minimum wage law causes unemployment. B.Unemployment would be lower without a minimum wage law. C.Minimum wage laws benefit some workers and harm others. D.The minimum wage should be more than $7.25 per hour. Which of the consequences above are positive statements and which are normative statements?

How does the study of microeconomics differ from that of macroeconomics? Give one example each of an issue studied in microeconomics and in macroeconomics.

Table 1-1 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 1-1.What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour?