Exam 1: Economics: Foundations and Models

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

Economists assume that

Which of the following is a normative economic statement?

Human capital refers to the accumulated skills and training that workers possess.

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?

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?

Marginal cost is the ________ associated with a particular increase in an activity.

Which of the following statements is true about revenue?

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called

Scenario 1-2 Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes,"Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000,we are only making an overall profit of $3,000 per week so I think we need to cut back on production. -Refer to Scenario 1-2.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 500 cigars?

"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 is a positive economic statement?

Table 1-4 -Refer to Table 1-4.The table above shows the sales of flat-panel television sets in Central America.Present the information using a bar graph.

What is scarcity,and why is it a fundamental concept in economics?

Table 1-3 Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour. -Refer to Table 1-3.What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?

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

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal cost.

Scenario 1-1 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 1-1.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 400 t-shirts?

Which of the following is part of an economic model?

In a centrally planned economy,the government decides how economic resources will be allocated.