Question 1

What is technology and what factors does it depend on?

Accepted Answer

The answer of What is technology and what factors does...

Question 2

An "omitted variable" is

Accepted Answer

A) a variable which is purposely omitted from an economic analysis. 
B) a variable which is inadvertently omitted from an economic analysis. 
C) a variable that has no impact on other variables in an economic analysis. 
D) a variable that affects other variables and its omission from economic analysis can lead to false conclusions about cause and effect.

Question 3

It is necessary for all economic systems to provide people with goods and services and also restrict them from getting as much of these goods and services as they wish,because failure to do this could ________ the efficiency of the system by producing some goods and services that are ________.

Accepted Answer

A) reduce;not as highly valued as others 
B) increase;not as highly valued as others 
C) reduce;valued more than others 
D) increase;valued more than others

Question 4

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

Accepted Answer

A) zero,since he will no longer be earning a salary 
B) depends on the "going rate" for stay-at-home dads 
C) at least $60,000 
D) the value he attributes to the joy of parenting

Question 5

Which of the following is part of an economic model?

Accepted Answer

A) assumptions 
B) norms 
C) opinions 
D) preferences of economic agents

Question 6

Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.What is his marginal cost to complete the restoration?

Accepted Answer

A) $75 
B) $125 
C) $200 
D) $300

Question 7

Who receives the goods and services produced in the United States depends largely on

Accepted Answer

A) how income is distributed. 
B) how the goods and services are produced. 
C) what goods and services are produced. 
D) government redistribution.

Question 8

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 cost if she decides to stay open for two hours instead of one hour?

Accepted Answer

A) $12 
B) $24 
C) $36 
D) $71

Question 9

The revenue received from the sale of an additional unit of a product

Accepted Answer

A) is a marginal benefit to the firm. 
B) is called profit. 
C) is called gross sales. 
D) is called a net gain.

Question 10

Which of the following statements is false?

Accepted Answer

A) Anytime you have to decide which action to take you are facing an economic trade-off. 
B) Trade-offs do not apply when the consumers purchase a product for which there is excess supply,such as a stock clearance sale. 
C) Every individual,no matter how rich or poor,is faced with making trade-offs. 
D) Economics is a social science that studies the trade-offs we are forced to make because of scarcity.

Question 11

What is the difference between physical capital and human capital?

Accepted Answer

The answer of What is the difference between physical capital...

Question 12

Skeeter's Skeeball Castle has seen its business slow down ever since Kerrie's Off-Key Karaoke opened up next door.Since the opening of Kerrie's Off-Key Karaoke,the opportunity cost of playing skeeball at Skeeter's has

Accepted Answer

A) decreased. 
B) increased. 
C) fallen to zero. 
D) not changed.

Question 13

________ 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

Exam 1: Economics: Foundations and Models