Exam 1: Economics: Foundations and Models

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. Should Allison continue to offer the 3-color pinstripe application?

Policies based on positive economic ideas tend to decrease economic efficiency and reduce equity.

How does a market system prevent people from getting as many goods and services as they wish?

Explain why economics is considered a social science.

Economics promotes which of the following as the way to make the best decision?

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

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that

At a recent company meeting, Geraldine Erwin, sales manager of Dastoria, a flavored-beverage producer announced, "We have increased our sales by 8 percent in just six months." Suppose six months ago, its sales amounted to $452,000, what is the value of its sales today?

A primary role of ________ is to describe how choices are made, analyze the results of those choices, and advise on how better decisions can be made.

Economists reason that the optimal decision is to continue any activity up to the point where the

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

The machines that workers have to work with are considered

One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers. Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?

Figure 1-3 -Refer to Figure 1-3. Calculate the area of the trapezoid X.

Which of the following can use economic principles to improve how they make important decisions?

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package?

Consider the following statements: a. Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area. b. Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment. c. Manufacturers produce less of a particular cell phone when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives?

The processes used to produce goods and services describes

Of the following examples, which would most likely be performed by an economist working for the U.S. Federal Trade Commission?

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