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Exam 1: Economics: Foundations and Models

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Question 181

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How are the fundamental economic decisions determined in Cuba?

A) Individuals,firms,and the government interact in a market to make these economic decisions.
B) These decisions are made by the country's elders who have had much experience in answering these questions.
C) The government decides because Cuba is a centrally planned economy.
D) The United Nations decides because Cuba is a developing economy.

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Question 182

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Competition forces firms to produce and sell products as long as the ________ to consumers exceeds the ________ of production.

A) marginal benefit;marginal cost
B) marginal benefit;marginal benefit
C) marginal cost;marginal cost
D) marginal cost;marginal benefit

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Question 183

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In a centrally planned economy,the government decides how economic resources will be allocated.

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

All of the following contributed to the downfall of the Soviet Union in 1991 except

The branch of economics which studies the behavior of entire economies is called

What is meant by the statement that "optimal decisions are made at the margin"?

Which of the following is a positive economic statement?

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

In economics,all of the following is counted as "capital" except

A grocery store sells a bag of potatoes at a fixed price of $2.30.Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes?

Define allocative efficiency.Explain the significance of this concept in economics?

In economics,the practical application of an invention is known as

The machines workers have to work with are considered

Table 1-1 $\begin{array} { | c | c | } \hline \begin{array} { c } \text { Extra Hours } \\\text { Open }\end{array} & \begin{array} { c } \text { Total Revenue } \\\text { (dollars) }\end{array} \\\hline 1 & \$ 50 \\\hline 2 & 75 \\\hline 3 & 95 \\\hline 4 & 110 \\\hline 5 & 120 \\\hline 6 & 125 \\\hline\end{array}$ Lydia runs a small nail salon in the town of New Hope.She is debating whether she should extend her hours of operation.Lydia figures that her sales revenue will depend on the number of extra hours the nail salon is open as shown in the table above.She would have to hire a worker for those extra hours at a wage rate of $10 per hour. -Refer to Table 1-1.What is Lydia's marginal cost if she decides to stay open for an extra two hours instead of one hour?

Refer to Table 1-3.What is Santiago's marginal cost if he decides to stay open for an extra two hours instead of one hour?

Human capital refers to

How can the influence of a third variable be shown on a two-dimensional graph?

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

Scenario 1-1 Suppose a cell phone manufacturer currently sells 20,000 cell phones per week and makes a profit of $5,000 per week.A manager at the plant observes,"Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700,we are still making an overall profit of $5,000 per week so I think we're on the right track.We are producing the optimal number of cell phones." -Refer to Scenario 1-1.Had the firm not produced and sold the last 3,000 cell phones,would its profit be higher or lower,and by how much?