Exam 1: Economics: Foundations and Models

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 cost of producing the last 3,000 cell phones?

Table 1.1 Hours Open Total Revenue (dollars) 1 \ 50 2 75 3 95 4 110 5 120 6 125 Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour. -Refer to Table 1.1.What is Lydia's marginal benefit if she decides to stay open for two hours instead of one hour?

Table 1.1 Hours Open Total Revenue (dollars) 1 \ 50 2 75 3 95 4 110 5 120 6 125 Lydia runs a small nail salon in the town of New Hope. She is debating whether she should extend her hours of operation. Lydia figures that her sales revenue will depend on the number of hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour. -Refer to Table 1.1.Using marginal analysis, determine how many hours should Lydia extend her nail salon's hours of operations?

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.Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and if so by how much?

Which of the following is an example of an efficiency-equity trade-off faced by economic agents?

The distribution of income primarily determines which of the fundamental economic questions?

________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X.

Allocative efficiency is achieved when firms produce goods and services

The relationship between consumer spending and disposable personal income is

In economics, the accumulated skills and training that workers have is known as

Allocative efficiency best explains ________, and productive efficiency best explains ________.

A grocery store sells a bag of potatoes at a fixed price of $5.50.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

Which of the following is motivated by an efficiency concern?

What are some of the reasons given for the increase in coffee prices?

Economists assume that rational people do all of the following except

Examining the conditions that could lead to a recession in an economy is an example of macroeconomics topic.

Who receives the most of what is produced in a market economy?

Macroeconomics is the study of

All of the following are part of an economic model except

"An increase in the price of gasoline will increase the demand for hybrid vehicles." This statement is an example of a positive economic statement.