Exam 1: Economics: Foundations and Models

The number of people who have gray hair is very high among residents living in Florida.A student concludes that living in Florida causes hair to turn gray.What is the flaw in this student's reasoning?

Scenario 1-1 Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes,"Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800,we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts." -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 400 t-shirts?

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

If the price of pineapple juice was $4.50 a gallon and it is now $5.75 a gallon,what is the percentage change in price?

What is a household? How do households interact with firms in a market?

In a market economy,________ interact in markets to decide the answers to the fundamental economic questions.

Which of the following is a positive economic statement?

Which of the following is part of an economic model?

Economics promotes which of the following as the way to make the best decision?

Consider the following statements: a.Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach. B.Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment. C.Farmers produce more cotton when its selling price falls. Which of the above statements demonstrates that economic agents respond to incentives?

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.What is Ivan's marginal benefit if he decides to stay open for six hours instead of five hours?

Explain the term "economics."

Figure 1-2 -Refer to Figure 1-2.Calculate the area of the triangle A.

Scenario 1-2 Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes,"Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000,we are only making an overall profit of $3,000 per week so I think we need to cut back on production. -Refer to Scenario 1-2.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 500 cigars?

Economic models

"A decrease in the price of digital cameras will decrease the demand for camera film." This statement is an example of a positive economic statement.

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

Productive efficiency is achieved when firms produce goods and services

In economics,activities done for others,such as providing house cleaning or dental work,are referred to as