Exam 1: Economics: Foundations and Models

The additional cost to a producer of hiring an additional unit of labour is called the marginal cost.

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

What do economists call the idea that because of scarcity,producing more of one good or service means producing less of another good or service?

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

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal benefit.

The government makes all economic decisions in a market economy.

What is the name of the branch of economics which studies the behaviour of entire economies?

Assume that a doctor can earn an additional $20 000 of revenue each year from keeping his office open for one additional hour per week.What must the additional cost of keeping the office open this additional hour per week be to make staying open for the extra hour economically rational? __________________________________________________________________________________________________________________________________________________________________________________________

Microeconomics is the study of________.

Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky,and therefore carry a higher cost than not retiring.By using all available information as they act to achieve their goals,these teachers are exemplifying the economic idea that________.

What is a marginal cost? __________________________________________________________________________________________________________________________________________________________________________________________

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?

A university must decide if it wants to offer more adult literacy classes.This decision involves answering the economic question of 'for whom to produce'.

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

When voluntary exchange takes place,neither party gains from the exchange.

Which of the following is part of an economic model?

Explain the economic idea that 'people respond to incentives'. __________________________________________________________________________________________________________________________________________________________________________________________

In economics,choices must be made because we live in a world of __________.

'The distribution of income should be left to the market' is an example of a positive economic statement.

A problem inherent in centrally planned economies is __________.