Exam 1: Economics Foundations and Models

The prevalence of Alzheimer's dementia is very high among residents living in nursing homes. A student concludes that it is likely that living in a nursing home causes Alzheimer's dementia. What is the flaw in the student's reasoning?

Mr. Peabody chooses to invest in companies that produce goods and services at the lowest possible cost. Mr. Peabody is investing in companies that are

In economics, the term ________ means 'additional' or 'extra.'

A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

Scarcity is a problem that will eventually disappear as technology advances.

Trinh quits his $80 000-a-year job to become a full-time volunteer at a museum. What is the opportunity cost of his decision?

Making optimal decisions 'at the margin' requires

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package?

When production reflects consumer preferences, ________ occurs.

The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of

Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that

Where do economic agents, such as individuals, firms and nations, interact with each other?

Scarcity refers to a situation in which unlimited wants exceed the limited resources available to fulfill those wants.

If a graph has a line that shows the amount of outsourcing in the last ten years, it is known as

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.

Which of the following is a normative economic statement?

Which of the following is a normative economic statement?

Economists assume that individuals

Voluntary exchange ________ economic efficiency because neither the buyer nor the seller would agree to a trade unless ________.

Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-colour pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-colour pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. What is Allison's marginal benefit if she sells a basic 1-colour job?