econ 2

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 cost of completing the task?

$200

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 quilts "as is now?

$900

a. consumers rent more DVDs from a video store that rents DVDs at a lower price than other rival video stores in area b. department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment c. farmers produce more cotton when its selling price falls

a and b demonstrates that economic agents respond to incentives

if the marginal cost of producing a tv is constant at $200, then a firm should produce this item

as long as the marginal benefit it receives is just equal to or greater than $200

economics is the study of the _____ people make to attain their goals, given heir______ resources

choices; scarce

the basic economic problem of scarcity

has always existed and will continue to exist

_____ involves undertaking an activity until its marginal benefits equal marginal costs

marginal analysis

Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave ________, meaning they make the best decisions given their knowledge of the costs and benefits

rationally

the study of economics arises due to

scarcity

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?

she should purchase the period fabric complete the task and then sell the quilt