Exam 1: Economics: Foundations and Models

The economic analysis of minimum wage involves both normative and positive analysis.Consider the following consequences of a minimum wage: a.The minimum wage law causes unemployment. b.Unemployment would be lower without a minimum wage law. c.Minimum wage laws benefit some workers and harm others. d.The minimum wage should be more than $7.25 per hour. Which of the consequences above are positive statements and which are normative statements?

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?

As recently as 2002,________ medical practices were owned by doctors as by hospitals,and by 2008,________ medical practices were owned by doctors as by hospitals.

Table 1-1 Eva runs a small bakery in the village of Roggerli. She is debating whether she should extend her hours of operation. Eva figures that her sales revenue will depend on the number of hours the bakery is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $12 per hour. -Refer to Table 1-1. What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour?

The Stogie Shop,a cigar store in the mall,sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each.What is the opportunity cost of buying a hand-rolled cigar?

What is the difference between economic efficiency and equity?

Figure 1-4 -Refer to Figure 1-4.Which of the following statements is true?

Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

The revenue received from the sale of an additional unit of a product

Which of the following generates allocative efficiency in a market economy?

Allocative efficiency is achieved when

What is the difference between accounting profit and economic profit?

What is scarcity,and why is it a fundamental concept in economics?

Your roommate,Serafina,a psychology major,said,"The problem with economics is that it assumes that consumers and firms always make the correct decision.But we know that everyone's human,and we all make mistakes." Do you agree with her comment?

In 2010,Smileytown consumed 50,000 tubes of toothpaste.In 2011,toothpaste consumption rose to 62,000 tubes.Calculate the percentage change in toothpaste consumption.

There is often a trade-off between

Marginal cost is the ________ associated with undertaking an activity.

Which of the following is a positive economic statement?

Which of the following are positive economic statements and which are normative economic statements? a.An increase in the minimum wage causes unemployment. b.The government should raise the minimum wage above $7.25 per hour. c.The prolonged recession has caused the unemployment rate to reach a 30-year high. d.Interest rates need to be lower for the economy to emerge from the recession. e.Inflation has decreased since the onset of the recession. f.Once the recession has ended,interest rates should increased to assure that inflation does not go up.

When goods and services are produced at the lowest possible cost,________ occurs.