Question 1

Table 1-3
  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 hours the store 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 1-3. Using marginal analysis, determine how many hours should Santiago extend his store's hours of operations?

Accepted Answer

A)  2 hours 
B)  3 hours 
C)  4 hours 
D)  5 hours 
E)  6 hours

Question 2

Since 1994, obesity rates in the United States

Accepted Answer

A)  have been on a slow and steady decline. 
B)  have increased in all 50 states. 
C)  have primarily increased in the Southeast and remained constant or slightly decreased in the remainder of the country. 
D)  have remained fairly constant throughout the country.

Question 3

Which of the following generates allocative efficiency in a market economy?

Accepted Answer

A)  national government intervention 
B)  voluntary exchange between buyers and sellers 
C)  United Nations rules for competition 
D)  equity

Question 4

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.

Question 5

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?

Accepted Answer

A)  $200 
B)  $500 
C)  $1,000 
D)  $1,000 plus the value of her time

Question 6

How are the fundamental economic decisions determined in Canada?

Accepted Answer

A)  Individuals, firms, and the government interact in a market to make these economic decisions. 
B)  These decisions are made by the country's elders who have had much experience in answering these questions. 
C)  The government decides because Canada is a centrally planned economy. 
D)  The United Nations decides because Canada is a developing economy.

Question 7

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

Accepted Answer

A)  only the producers 
B)  only consumers 
C)  only the government 
D)  all of the above

Question 8

Table 1-1
  Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.
-Refer to Table 1-1. What is Lydia's marginal cost if she decides to stay open for two hours instead of one hour?

Accepted Answer

A)  $10 
B)  $20 
C)  $25 
D)  $40

Question 9

Define macroeconomics.

Accepted Answer

The answer of Define macroeconomics....

Question 10

The term "market" refers only to trading arrangements that have been approved by the government.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is a positive economic statement?

Accepted Answer

A)  People should not buy imported fruits and vegetables. 
B)  The government should subsidize solar power for homeowners. 
C)  The minimum wage law causes unemployment. 
D)  The number of work visas should not be limited by the government.

Question 12

Which of the following is a positive economic statement?

Accepted Answer

A)  The standard of living in the United States should be higher. 
B)  If the price of iPhones falls, a larger quantity of iPhones will be purchased. 
C)  The government should revamp the health care system. 
D)  The U.S. government should not have bailed out U.S. auto manufacturers.

Question 13

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

Accepted Answer

A)  people with health insurance will be less likely to be overweight than people without health insurance. 
B)  people with health insurance will be more likely to be overweight than people without health insurance. 
C)  people with health insurance will be equally likely to be overweight as people without health insurance. 
D)  there is no correlation between having health insurance and being overweight.

Question 14

In 2012, Peelville consumed 30,000 bananas. In 2013, banana consumption rose to 35,000. Calculate the percentage change in banana consumption.

Accepted Answer

A)  11.66% 
B)  14.28% 
C)  16.67% 
D)  22.25%

Question 15

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Accepted Answer

A)  Scarcity reduction 
B)  Central planning 
C)  Marginal analysis 
D)  Market intervention

Question 16

Which of the following is a normative economic statement?

Accepted Answer

A)  Rising corn prices have increased the price of corn-based ethanol. 
B)  With rising home prices and falling mortgage interest rates, the amount of home foreclosures has decreased. 
C)  The federal government is considering increasing regulations on the use of fossil fuels to promote the use of wind power. 
D)  Farmers should not be allowed to grow and sell genetically-modified crops.

Question 17

In 2013, Smileytown consumed 12,000 gallons of mouthwash. In 2014, mouthwash consumption rose to 17,000 gallons. Calculate the percentage change in mouthwash consumption.

Accepted Answer

A)  17.2% 
B)  29.4% 
C)  41.7% 
D)  70.6%

Question 18

How are the fundamental economic decisions determined in North Korea?

Accepted Answer

A)  Individuals, firms, and the government interact in a market to make these economic decisions. 
B)  These decisions are made by the country's elders who have had much experience in answering these questions. 
C)  The government decides because North Korea is a centrally planned economy. 
D)  The United Nations decides because North Korea is a developing economy.

Question 19

All ________ economies have been political dictatorships.

Accepted Answer

A)  centrally planned 
B)  mixed 
C)  market 
D)  mixed and market

Question 20

Figure 1-2 
-Refer to Figure 1-2. Calculate the area of the triangle A.

Accepted Answer

A)  $1.3 million 
B)  $2.6 million 
C)  $3.4 million 
D)  $5.2 million

Exam 1: Economics: Foundations and Models

Since 1994, obesity rates in the United States

Which of the following generates allocative efficiency in a market economy?

How are the fundamental economic decisions determined in Canada?

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

Define macroeconomics.

The term "market" refers only to trading arrangements that have been approved by the government.

Which of the following is a positive economic statement?

Which of the following is a positive economic statement?

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

In 2012, Peelville consumed 30,000 bananas. In 2013, banana consumption rose to 35,000. Calculate the percentage change in banana consumption.

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Which of the following is a normative economic statement?

In 2013, Smileytown consumed 12,000 gallons of mouthwash. In 2014, mouthwash consumption rose to 17,000 gallons. Calculate the percentage change in mouthwash consumption.

How are the fundamental economic decisions determined in North Korea?

All ________ economies have been political dictatorships.

Figure 1-2 -Refer to Figure 1-2. Calculate the area of the triangle A.