Exam 1: Economics: Foundations and Models

When every good or service is produced up to the point where the last unit provides ________, allocative efficiency occurs.

"A decrease in the price of tablet computers will decrease the demand for desktop computers." This statement is an example of a normative economic statement.

Lionel's Lawn Care is a company that maintains residential yards. Lionel's cost for his standard package of mowing, edging, and trimming is $15, and he charges $25 for this service. For a total price of $40, Lionel will also trim shrubs, a service that adds an additional $10 to the total cost of the standard package. Should Lionel continue to offer the shrub-trimming service?

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

In the first six months of 2003, branches of Commerce Bank in New York City were robbed 14 times. The New York City Police recommended steps the bank could take to deter robberies, including the installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take their advice. According to a deputy commissioner of police, "Commerce does very little of what we recommend. They've told our detectives they have no interest in ever putting in the barriers." It would seem that Commerce Bank would have a strong incentive to install "bandit barriers" to deter robberies. Why wouldn't they do it?

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 should she do?

Describe what has happened to state obesity rates in the United States since 1994.

Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their goals, these teachers are exemplifying the economic idea that

Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is Allison's marginal benefit if she sells a basic 1-color job?

More chief executive officers of Fortune 500 companies majored in economics than in any other subject.

________ occurs when economic benefits are distributed fairly.

"The unemployment rate is too high" is an example of a positive economic statement.

Technology is defined as

In economics, the term "equity" means

Individuals can use economic principles to improve their decision-making process.

Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives?

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

Suppose the extra cost for a town to lower its speed limit by 5 mph is $20 per day. Then, the town should lower the speed limit if it can generate an additional benefit of $20 per day.

What is a firm? What other terms do economists use interchangeably with the term "firm"?

In economics, the term ________ means "additional" or "extra."