Question 1

All of the following are part of an economic model except

Accepted Answer

A)  assumptions. 
B)  hypotheses. 
C)  data. 
D)  opinions.

Question 2

In a modern mixed economy, who decides what goods and services will be produced?

Accepted Answer

A)  only the producers 
B)  only consumers 
C)  only the government 
D)  all of the above

Question 3

Consider the following economic agents: a. the government
B. consumers
C. producers
Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?

Accepted Answer

A)  the government 
B)  producers 
C)  consumers 
D)  consumers and producers

Question 4

Economists assume that rational people do all of the following except

Accepted Answer

A)  use all available information as they act to achieve their goals. 
B)  undertake activities that benefit others and hurt themselves. 
C)  weigh the benefits and costs of all possible alternative actions. 
D)  respond to economic incentives.

Question 5

Suppose the extra cost to a doctor of keeping his office open on Saturdays is $1200. Then, the doctor should stay open on Saturdays if keeping the office open brings in additional revenue of $1200 or more.

Accepted Answer

A) True 
 B)False

Question 6

The term 'market' refers to trading arrangements by which buyers and sellers come together.

Accepted Answer

A) True 
 B)False

Question 7

Allocative efficiency is achieved when firms produce goods and services

Accepted Answer

A)  at the lowest possible cost. 
B)  that consumers value most. 
C)  at the lowest opportunity cost. 
D)  at a marginal cost of zero.

Question 8

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

Accepted Answer

A)  an additional unit 
B)  the total number of units 
C)  no units 
D)  only profitable units

Question 9

If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16, the slope of this line is

Accepted Answer

A)  negative 8 divided by 4. 
B)  seven tenths. 
C)  negative one half. 
D)  one and one half.

Question 10

Suppose a doctor can earn an additional $25 000 in revenue per year by keeping her office open on Sundays. At what additional cost would keeping the office open on Sundays not be considered economically rational?

Accepted Answer

The answer of Suppose a doctor can earn an additional...

Question 11

Making 'how much' decisions involves

Accepted Answer

A)  calculating the total benefits of the activity and determining if you are satisfied with that amount. 
B)  calculating the total costs of the activity and determining if you can afford to incur that expenditure. 
C)  calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. 
D)  determining the additional benefits and the additional costs of that activity.

Question 12

Why is it necessary for all economic systems to not only provide people with goods and services, but also restrict them from getting as much of these goods and services as they wish?

Accepted Answer

A)  Failure to do this could reduce the efficiency of the system by producing some goods and services that are not as highly valued as others. 
B)  Failure to do this could lead to an inequitable allocation of goods and services produced. 
C)  Failure to do this could lead to drastic shortages of good and services. 
D)  Failure to do this could reduces efficiency and leads to an inequitable allocation of output.

Question 13

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 DeShawn's marginal benefit if he sells a basic detailing package?

Accepted Answer

A)  $35 
B)  $75 
C)  He incurs a marginal loss of $15, not a marginal benefit. 
D)  The marginal benefit cannot be determined.

Question 14

What is an economic variable?

Accepted Answer

The answer of What is an economic variable?...

Question 15

If the price of milk was $2.50 a litre and it is now $3.25 a litre, what is the percentage change in price?

Accepted Answer

A)  13 per cent 
B)  30 per cent 
C)  75 per cent 
D)  77 per cent

Question 16

By definition, economics is the study of

Accepted Answer

A)  how to make money in the stock market. 
B)  how to make money in a market economy. 
C)  the choices people make to attain their goals, given their scarce resources. 
D)  supply and demand.

Question 17

The government makes all economic decisions in a mixed economy.

Accepted Answer

A) True 
 B)False

Question 18

'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.

Accepted Answer

A) True 
 B)False

Question 19

Productive efficiency is achieved when

Accepted Answer

A)  firms add a low profit margin to the goods and services they produce. 
B)  firms produce the goods and services that consumers value most. 
C)  firms produce goods and services at the lowest cost. 
D)  there are no shortages or surpluses in the market.

Question 20

Damian shares a small food truck with his sister. His share of the expenses is $500 per month. He has decided to get his own, newer food truck which he will not have to share with anyone. His expenses for the newer truck are $1400 per month. Damian is as rational as any other person. As an economics major, you rightly conclude that

Accepted Answer

A)  Damian cannot afford the newer truck and will have to go back to sharing a truck with his sister. 
B)  Damian figures that the additional benefit of having his own truck (as opposed to sharing) is at least $900. 
C)  Damian figures that the benefit of having his own truck (as opposed to sharing) is at least $1400. 
D)  the cost of having one's own truck outweighs the benefits.

Exam 1: Economics Foundations and Models

All of the following are part of an economic model except

In a modern mixed economy, who decides what goods and services will be produced?

Consider the following economic agents: a. the government B. consumers C. producers Who, in a centrally planned economy, decides what goods and services will be produced with the scarce resources available in that economy?

Economists assume that rational people do all of the following except

Suppose the extra cost to a doctor of keeping his office open on Saturdays is $1200. Then, the doctor should stay open on Saturdays if keeping the office open brings in additional revenue of $1200 or more.

The term 'market' refers to trading arrangements by which buyers and sellers come together.

Allocative efficiency is achieved when firms produce goods and services

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16, the slope of this line is

Suppose a doctor can earn an additional $25 000 in revenue per year by keeping her office open on Sundays. At what additional cost would keeping the office open on Sundays not be considered economically rational?

Making 'how much' decisions involves

Why is it necessary for all economic systems to not only provide people with goods and services, but also restrict them from getting as much of these goods and services as they wish?

What is an economic variable?

If the price of milk was $2.50 a litre and it is now $3.25 a litre, what is the percentage change in price?

By definition, economics is the study of

The government makes all economic decisions in a mixed economy.

'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.

Productive efficiency is achieved when