Exam 1: Economics Foundations and Models

The decisions Apple makes in determining production levels for its iPhone is an example of a microeconomics topic.

Explain the economic assumption that 'people are rational.'

Which of the following statements about the economic decisions consumers, firms, and the government have to make is false?

The branch of economics which studies how households and firms interact in markets is called

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

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

Which of the following are primarily macroeconomic topics and which are primarily microeconomic topics? a. petrol prices b. unemployment c. inflation d. health care costs e. air pollution f. economic growth

The distribution of income primarily determines which of the fundamental economic questions?

Markets promote

-Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2007 and 2011.

Even if the population declines, scarcity will still exist.

Economists assume that rational behaviour is useful in explaining choices people make

Consider the following statements: a. Car owners purchase more petrol from a petrol station that sells petrol at a lower price than other rival petrol stations in the area. B. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. C. Firms produce more of a particular DVD when its selling price rises. Which of the above statements demonstrates that economic agents respond to incentives?

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. Should Allison continue to offer the 3-colour pinstripe application?

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

Automobile manufacturers produce a range of automobiles such as sports utility vehicles, luxury sedans, pickup trucks and compact cars. What fundamental economic question are they addressing by making this range of products?

What is a marginal benefit?

All centrally planned economies

Which of the following is a macroeconomics question?

________ increases economic efficiency because it forces firms to produce and sell goods and services as long as the additional benefit to consumers is greater than the additional cost of production.