Exam 1: Economics: Foundations and Models

What is an economic variable? __________________________________________________________________________________________________________________________________________________________________________________________

The decision about what goods and services will be produced in a market economy is made by ___________.

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

Suppose the extra cost to a doctor of keeping his office open on Saturdays is $1 200.Then,the doctor should stay open on Saturdays if keeping the office open brings in additional revenue of $1 200 or more.

Positive analysis is concerned with 'what ought to be',while normative analysis is concerned with 'what is'.

Which of the following statements is true about competition in a market?

Allocative efficiency best explains ________,and productive efficiency best explains ________.

Define productive efficiency.Does productive efficiency imply allocative efficiency? Explain. __________________________________________________________________________________________________________________________________________________________________________________________

Which of the following is a normative economic statement?

What is the branch of economics which studies how households and firms interact in markets?

What is equity,and how does it differ from efficiency? __________________________________________________________________________________________________________________________________________________________________________________________

What is a centrally planned economy? __________________________________________________________________________________________________________________________________________________________________________________________

When Mr.Peabody decides on the companies to which he will donate his time and money,a ________ issue is being addressed.

'A decrease in the price of tablet computers will decrease the demand for desktop computers.' This statement is an example of a normative economic statement.

If it costs Sinclair $300 to produce three suede jackets and $420 to produce four suede jackets,then the difference of $120 is the marginal cost of producing the fourth suede jacket.

What does making optimal decisions 'at the margin' require?

Economic agents,such as individuals,firms,and nations,interact with each other________.

Which of the following statements is true?

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________.

Allocative efficiency is achieved when firms produce goods and services________.