Exam 1: Economics: Foundations and Models

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

"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.

Marginal benefit refers to the additional benefit that your activity provides to you.

If it costs Danitra $225 to create 4 necklaces and $275 to create 5 necklaces, then the marginal cost of producing the 5th necklace is $50.

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

What is a centrally planned economy?

Arlene quits her $125,000-a-year job to take care of her ailing parents.What is the opportunity cost of her decision?

Positive analysis is concerned with "what ought to be," while normative analysis is concerned with "what is."

If it costs Sinclair $300 to produce 3 suede jackets and $420 to produce 4 suede jackets, then the difference of $120 is the marginal cost of producing the 4th suede jacket.

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

One reason some manufacturing companies have moved production from overseas locations back to the United States is rising foreign labor costs.Assuming that managers at these companies used all available information, including the rising cost of foreign labor, when making the decision to move production back to the United States exemplifies which key economic idea?

All of the following questions or statements regarding tariffs are positive statements except:

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 the marginal cost of moving up from the 1-color application to the 3-color application?

The relationship between consumer spending and disposable personal income is

When voluntary exchange takes place, neither party gains from the exchange.

Of the following examples, which would likely be performed by an economist working for Apple?

Table 1-2 Thuy Anh runs a small flower shop in the town of Florabunda. She is debating whether she should extend her hours of operation. Thuy Anh figures that her sales revenue will depend on the number of extra hours the flower shop is open as shown in the table above. She would have to hire a worker for those extra hours at a wage rate of $16 per hour. -Refer to Table 1-2.What is Thuy Anh's marginal cost if she decides to stay open for an extra three hours instead of two hours?

Which of the following is a result of a market economy?

Which of the following is a normative economic statement?

Making optimal decisions "at the margin" requires