Exam 1: Economics: Foundations and Models

The prevalence of Alzheimer's dementia is very high among residents living in nursing homes.A student concludes that it is likely that living in nursing home causes Alzheimer's dementia.What is the flaw in the student's reasoning?

If a graph has a line that shows the amount of outsourcing in the last ten years, it is known as

________ is a situation in which a good or service is produced at the lowest possible cost.

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

One example of human capital is the amount of skills that you have.

Figure 1.3 -Refer to Figure 1.3.Calculate the area of the trapezoid X.

Which of the following is motivated by an equity concern?

In the market for factors of production, firms earn income by selling goods and services to households.

Which of the following statements is true about scarcity?

An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue.

Scenario 1.1 Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week. A manager at the plant observes, "Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we're on the right track. We are producing the optimal number of cell phones." -Refer to Scenario 1.1.Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 3,000 cell phones?

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?

You explain to your roommate Surya, who makes beaded headbands, about an economic theory which asserts that consumers will purchase more of a product at lower prices than they will at higher prices.She contends that the theory is incorrect because over the past two years she has lowered the price of her headbands and yet has seen a decrease in sales.How would you respond to Surya?

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits.

Political candidates often hold fund raisers by charging "per plate" for dinner.Wendy purchased four tickets to a $1,000 per plate dinner for a local city council candidate.Is this transaction economically efficient?

Explain why economics is considered a social science.

The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomics topic.

Which of the following statements is false?

Economic models do all of the following except

The decision about what goods and services will be produced made in a market economy is made by