CH 1 quiz

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?

$900

The Farm Factory, a booth at the local Farmer's Market, sells fresh eggs for $1.50 per dozen and fresh milk for $2.50 per gallon. What is the opportunity cost of buying a dozen eggs?

3/5 of a gallon of milk

________ involves undertaking an activity until its marginal benefits equal marginal costs.

Marginal analysis

Which of the following contributes to the efficiency of markets?

Markets promote competition and voluntary exchange.

The term "market" in economics refers to

a group of buyers and sellers of a product and the arrangement by which they come together to trade.

What does the term "marginal" mean in economics?

an additional or extra

All ________ economies have been political dictatorships.

centrally planned

In a market economy, ________ interact in markets to decide the answers to the fundamental economic questions.

households and firms

Every society faces economic trade-offs. This means

producing more of one good means less of another good can be produced.

Scarcity refers to the situation in which

unlimited wants exceed limited resources