Exam 1: Economics: Foundations and Models

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called

What does the term "marginal" mean in economics?

Which of the following is a macroeconomic question?

As population declines,scarcity eventually disappears.

In a market economy,those who are willing and able to buy what is produced

Allocative efficiency is achieved when

Suppose the extra annual cost to a nation to enact a mandatory seat belt law for motorcycles is $850.Then,the nation should enact this seat belt law if doing so results in an additional benefit of $850 or more each year.

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What is the marginal cost of completing the task?

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?

Marginal benefit is the benefit that your activity provides to someone else.

What is the difference between accounting profit and economic profit?

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

You explain to your friend Haslina,who runs a catering service called "Meals in a Zip," about an economic theory which asserts that consumers will purchase less of a product at higher prices than they will at lower prices.She contends that the theory is incorrect because over the past two years she has raised the price of her catered meals and yet has seen a brisk increase in sales.How would you respond to Haslina?

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?

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

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

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

All ________ economies have been political dictatorships.

A college must decide if it wants to offer more evening and weekend classes.This decision involves answering the economic question of "for whom to produce."

Table 1-3 Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour. -Refer to Table 1-3.Using marginal analysis,how many hours should Ivan extend his hours of operations?