question
Scarcity refers to the situation in which
answer
unlimited wants exceed limited resources.
question
Economics is the study of the ________ people make to attain their goals, given their ________ resources.
answer
choices; scarce
question
What is an economic model?
answer
It is a simplified version of some aspect of economic life used to analyze an economic issue.
question
The term "market" in economics refers to
answer
a group of buyers and sellers of a product and the arrangement by which they come together to trade.
question
Economists assume that
answer
optimal decisions are made at the margin.
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Economists assume that rational people
answer
respond to economic incentives.
question
Your roommate, Serafina, a psychology major, said, "The problem with economics is that it assumes that consumers and firms always make the correct decision. But we know that everyone's human, and we all make mistakes." Do you agree with her comment?
answer
I disagree with her. Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally, meaning they make the best decisions given their knowledge of the costs and benefits.
question
What does the term "marginal" mean in economics?
answer
an additional or extra
question
Economics promotes which of the following as the way to make the best decision?
answer
Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.
question
Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is her marginal benefit if she sells the quilt "as is" now?
answer
$900
question
Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What is the marginal cost of completing the task?
answer
$200
question
Cassie's Quilts alters, reconstructs and restores heirloom quilts. Cassie has just spent $800 purchasing, cleaning and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished. After having spent $800, Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task. Alternatively, she can sell the quilt "as is" now for $900. What should she do?
answer
She should purchase the period fabric, complete the task and then sell the quilt.
question
Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."
Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 400 t-shirts?
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."
Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 400 t-shirts?
answer
marginal revenue
question
Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."
Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 400 t-shirts?
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."
Refer to Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 400 t-shirts?
answer
marginal cost
question
Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."
Refer to Scenario 1-1. Had the firm not produced and sold the last 400 t-shirts, would its profit be higher or lower, and if so by how much?
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week. A manager at the plant observes, "Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800, we are still making an overall profit of $10,000 per week so I think we're on the right track. We are producing the optimal number of t-shirts."
Refer to Scenario 1-1. Had the firm not produced and sold the last 400 t-shirts, would its profit be higher or lower, and if so by how much?
answer
Its profit will be $800 higher.
question
Consider the following economic agents:
a. the government
b. consumers
c. producers
Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?
a. the government
b. consumers
c. producers
Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?
answer
the government, consumers and producers
question
In a market economy, who decides what goods and services will be produced?
answer
consumers and producers
question
How are the fundamental economic decisions determined in Cuba?
answer
The government decides because Cuba is a centrally planned economy.
question
When goods and services are produced at the lowest possible cost, ________ occurs.
answer
productive efficiency
question
When every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it, ________ occurs.
answer
allocative efficiency
question
Allocative efficiency is achieved when
answer
firms produce the goods and services that consumers value most.
question
Which of the following contributes to the efficiency of markets?
answer
Markets promote competition and voluntary exchange.
question
Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.
answer
marginal benefit; marginal cost
question
Voluntary exchange increases economic efficiency
answer
because neither the buyer nor the seller would agree to a trade unless they both benefit.
question
Competition among sellers generates
answer
productive efficiency.
question
________ occurs when economic benefits are distributed fairly.
answer
Equity
question
Which of the following is motivated by an equity concern?
answer
Some U.S. colleges have cut back on merit scholarships since these programs siphon money from need-based programs, thus harming lower-income students with greater financial need.
question
Which of the following is motivated by an efficiency concern?
answer
Following a six-month drought, a city banned homeowners from watering their lawns in an effort to conserve water.
question
There is often a trade-off between
answer
economic efficiency and economic equity.
question
Which of the following is part of an economic model?
answer
assumptions
question
Which of the following is a positive economic statement?
answer
If the price of gasoline rises, a smaller quantity of it will be bought.
question
Which of the following is a normative economic statement?
answer
Fashion designers should be allowed to copyright designs to promote innovation.
question
The branch of economics which studies how households and firms make choices, interact in markets and how government attempts to influence their choices is called
answer
microeconomics.
question
Which of the following is a microeconomics question?
answer
How will Apple decide on a selling price for the iPad?
question
The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called
answer
macroeconomics.
question
Which of the following is a macroeconomics question?
answer
What determines the unemployment rate?
question
Which of the following statements is true about revenue?
answer
Revenue is the total amount received for selling a good or service.
question
Human capital refers to
answer
the accumulated skills and training workers have.
question
Which of the following is an example of an activity undertaken by an entrepreneur?
answer
starting your own snow cone business
question
Which of the following is counted as "capital" in economics?
answer
the machines workers have to work with
question
The processes used to produce goods and services describes
answer
technology.
question
In 2010, Smileytown consumed 50,000 tubes of toothpaste. In 2011, toothpaste consumption rose to 62,000 tubes. Calculate the percentage change in toothpaste consumption.
answer
24%
question
If a straight line passes through the point x = 12 and y = 4 and also through the point x = 4 and y = 8, the slope of this line is
answer
negative one half.
question
Refer to Figure 1-2. Calculate the area of the triangle A.
answer
$3.15 million
question
Refer to Figure 1-3. Calculate the area of the trapezoid X.
answer
$1,020
question
Refer to Figure 1-4. Which of the following statements is true?
answer
The slope of the tangent at E is positive and the slope of the tangent at F is negative.
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