Question 1

Table 1-2
 $$\begin{array} { | c | c | } 
\hline \begin{array} { c } 
\text { Extra Hours } \
\text { Open }
\end{array} & \begin{array} { c } 
\text { Total Revenue } \
\text { (dollars) }
\end{array} \
\hline 1 & \mathbf { \$ 2 5 } \
\hline \mathbf { 2 } & 45 \
\hline \mathbf { 3 } & 70 \
\hline 4 & 90 \
\hline 5 & 105 \
\hline 6 & 110 \
\hline
\end{array}$$ Thuy Anh runs a small flower shop in the town of Florabunda.She is debating whether she should extend her hours of operation.Thuy Anh figures that her sales revenue will depend on the number of extra hours the flower shop is open as shown in the table above.She would have to hire a worker for those extra hours at a wage rate of $16 per hour.
-Refer to Table 1-2.What is Thuy Anh's marginal benefit if she decides to stay open for an extra three hours instead of two hours?

Accepted Answer

A) $0 
B) $20 
C) $25 
D) $45 
E) $70

Question 2

Which of the following is motivated by an equity concern?

Accepted Answer

A) Some states have transferred funds to food bank programs in order to increase benefits to lower-income families. 
B) Following the implementation of subsidies for energy conservation,household demand for rooftop solar panels increased quite significantly in California. 
C) The United Network for Organ Sharing advocates a system of rationing scarce kidneys that would favor young patients over old in an effort to wring more life out of donated organs. 
D) The United States offers patent protection to pharmaceutical manufacturers to prevent others from duplicating their products.

Question 3

A college must decide if it wants to offer more adult literacy classes.This decision involves answering the economic question of "what to produce."

Accepted Answer

A) True 
 B)False

Question 4

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________.

Accepted Answer

A) increases;they both benefit 
B) increases;only one party benefits 
C) decreases;neither benefit 
D) decreases;they both benefit

Question 5

Suppose the extra cost for a company to advertise for one extra day each week in the local newspaper is $200.Then,the company should advertise on that additional day if it can generate additional revenue of $200 each week.

Accepted Answer

A) True 
 B)False

Question 6

Scenario 1-4
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 1-4.Had the firm not produced and sold the last 500 cigars,would its profit be higher or lower,and if so by how much?

Accepted Answer

A) Its profit would be $500 higher. 
B) Its profit would be $1,000 higher. 
C) Its profit would be $500 lower. 
D) Its profit would be $1,500 lower.

Question 7

Which of the following is a positive economic statement?

Accepted Answer

A) The inflation rate in the United States is too high. 
B) Unemployment insurance payments increase when the unemployment rate rises. 
C) The government should defund Obamacare. 
D) States should be able to enact their own marijuana legalization laws.

Question 8

Every society faces trade-offs.Explain the concept of trade-offs.

Accepted Answer

The answer of Every society faces trade-offs.Explain the concept of...

Question 9

The term "market" refers to trading arrangements by which buyers and sellers come together.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the U.S.government encouraged consumers to trade in their old automobiles for more efficient,new models by paying up to $5,000 for the old automobiles.These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that

Accepted Answer

A) people are rational. 
B) people respond to economic incentives. 
C) optimal decisions are made at the margin. 
D) equity is more important than efficiency.

Question 11

Explain why economics is considered a social science.

Accepted Answer

The answer of Explain why economics is considered a social...

Question 12

In economics,choices must be made because we live in a world of

Accepted Answer

A) unemployment. 
B) scarcity. 
C) greed. 
D) unlimited resources.

Question 13

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.A minimum wage law benefits some groups and hurts others.
C.In some cities such as San Francisco and New York,it would be impossible for low-skilled workers to live comfortably in the city without minimum wage laws.
D.The gains to winners of a minimum wage law should be valued more highly than the losses to losers because the latter primarily comprises businesses.
Which of the consequences above are positive statements and which are normative statements?

Accepted Answer

A) a,b,and c are positive statements and d is a normative statement. 
B) a and b are positive statements,c and d are normative statement. 
C) Only a is a positive statement,b,c,and d are normative statements. 
D) a and c are positive statements,b and d are normative statements.

Question 14

Which of the following is a microeconomics question?

Accepted Answer

A) Why do economies experience periods of high inflation? 
B) Will Federal Reserve intervention lower the inflation rate? 
C) Why has growth in the economy increased since the end of the recession? 
D) Will the merger of American Airlines and US Airways increase or decrease airfares?

Question 15

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Accepted Answer

A) True 
 B)False

Question 16

Explain the economic idea that "people respond to incentives."

Accepted Answer

The answer of Explain the economic idea that "people respond...

Question 17

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

Accepted Answer

The answer of What does the word "marginal" mean in...

Question 18

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?

Accepted Answer

A) 1 2/3 dozen eggs 
B) 3/5 of a dozen eggs 
C) $2.50 
D) $1.50

Question 19

The decisions General Motors makes in determining production levels for its Chevy Volt is an example of a microeconomics topic.

Accepted Answer

A) True 
 B)False

Question 20

Automobile manufacturers produce a range of automobiles such as sports utility vehicles,luxury sedans,pickup trucks,and compact cars.What fundamental economic question are they addressing by making this range of products?

Accepted Answer

A) How to produce goods that consumers want? 
B) Why produce a variety of automobiles? 
C) What to produce? 
D) Who to produce automobiles for?

Exam 1: Economics: Foundations and Models

Which of the following is motivated by an equity concern?

A college must decide if it wants to offer more adult literacy classes.This decision involves answering the economic question of "what to produce."

Voluntary exchange economic efficiency because neither the buyer nor the seller would agree to a trade unless .

Suppose the extra cost for a company to advertise for one extra day each week in the local newspaper is $200.Then,the company should advertise on that additional day if it can generate additional revenue of $200 each week.

Which of the following is a positive economic statement?

Every society faces trade-offs.Explain the concept of trade-offs.

The term "market" refers to trading arrangements by which buyers and sellers come together.

Suppose the U.S.government encouraged consumers to trade in their old automobiles for more efficient,new models by paying up to $5,000 for the old automobiles.These consumers who did trade in their old automobiles to take advantage of the government offer would be exemplifying the economic idea that

Explain why economics is considered a social science.

In economics,choices must be made because we live in a world of

Which of the following is a microeconomics question?

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets,then the difference of $120 is the marginal cost of producing the 4th suede jacket.

Explain the economic idea that "people respond to incentives."

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

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?

The decisions General Motors makes in determining production levels for its Chevy Volt is an example of a microeconomics topic.

Automobile manufacturers produce a range of automobiles such as sports utility vehicles,luxury sedans,pickup trucks,and compact cars.What fundamental economic question are they addressing by making this range of products?