micro exam 1

Figure 1-3 Refer to Figure 1-3. Calculate the area of the trapezoid X.

$1,020

Suppose your expenses for this term are as follows: tuition: $5,000, room and board: $3,000, books and other educational supplies: $500. Further, during the term, you can only work part-time and earn $4,000 instead of your full-time salary of $10,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?

$11,500

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?

$200

Figure 1-2 Refer to Figure 1-2. Calculate the area of the triangle A.

$3.15 million

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

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Refer to Figure 2-2. What is the opportunity cost of one dozen roses?

0.4 dozen orchids

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Refer to Figure 2-2. Suppose Vidalia is currently producing 20 dozen orchids per period. How many roses is it also producing, assuming that resources are fully utilized?

150 dozen roses

Figure 2-2 Figure 2-2 above shows the production possibilities frontier for Vidalia, a nation that produces two goods, roses and orchids. Refer to Figure 2-2. What is the opportunity cost of one dozen orchids?

2.5 dozen roses

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.

24%

Carmelita can perform either a combination of 35 manicures and 70 pedicures or a combination of 50 manicures and 45 pedicures. If she now performs 35 manicures and 70 pedicures, what is the opportunity cost of performing an additional 15 manicures?

25 pedicures

Economics promotes which of the following as the way to make the best decision?

Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost

________ occurs when economic benefits are distributed fairly.

Equity

Which of the following is a normative economic statement?

Fashion designers should be allowed to copyright designs to promote innovation

Which of the following is motivated by an efficiency concern?

Following a six-month drought, a city banned homeowners from watering their lawns in an effort to conserve water

Figure 2-3 Refer to Figure 2-3. Carlos Vanya grows tomatoes and strawberries on his land. His land is equally suited for growing either fruit. Which of the graphs in Figure 2-3 represents his production possibilities frontier? Correct!

Graph A

Figure 2-3 Refer to Figure 2-3. Carlos Vanya grows tomatoes and strawberries on his land. A portion of his land is more suitable for growing tomatoes and the other portion is better suited for strawberry cultivation. Which of the graphs in Figure 2-3 represent his production possibilities frontier?

Graph C

Which of the following is a microeconomics question?

How will Apple decide on a selling price for the iPad?

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?

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

Which of the following is a positive economic statement?

If the price of gasoline rises, a smaller quantity of it will be bought

Suppose there is some unemployment in the economy and society decides that it wants more of one good. Which of the following statements is true?

It can increase output without giving up another good by employing more resources.

What is an economic model?

It is a simplified version of some aspect of economic life used to analyze an economic issue.

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?

Its profit will be $800 higher

Figure 2-11 Refer to Figure 2-11. Which two arrows in the diagram depict the following transaction: Carter earns a $400 commission for selling men's designer shoes at Brooks Brothers.

J and M

Figure 2-11 Refer to Figure 2-11. Which two arrows in the diagram depict the following transaction: Lizzie Haxem hires "The Paint Pros," a professional painting company, to paint her home.

K and G

Figure 2-11 Refer to Figure 2-11. Which two arrows in the diagram depict the following transaction: Stanley purchases the novel, "Night of Sorrows" for his summer reading pleasure.

K and G

Which of the following contributes to the efficiency of markets?

Markets promote competition and voluntary exchange

Figure 2-1 Refer to Figure 2-1. ________ is (are) inefficient in that not all resources are being used.

Point A

Figure 2-1 Refer to Figure 2-1. ________ is (are) technically efficient.

Point B

Figure 2-1 Refer to Figure 2-1. ________ is (are) unattainable with current resources.

Point C

Which of the following statements is true about a simple circular flow model?

Producers are buyers in the factors market.

Which of the following statements is true about revenue?

Revenue is the total amount received for selling a good or service

________ exists because unlimited wants exceed the limited resources available to fulfill those wants.

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

Which of the following is motivated by an equity concern?

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

How are the fundamental economic decisions determined in Cuba?

The government decides because Cuba is a centrally planned economy

Figure 1-4 Refer to Figure 1-4. Which of the following statements is true?

The slope of the tangent at E is positive and the slope of the tangent at F is negative

Which of the following is a macroeconomics question?

What determines the unemployment rate?

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from ________ could occur because of an influx of immigrant labor.

X to Y

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. A movement from ________ is the result of advancements in plastic production technology.

Y to Z

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

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. Consider the following events: a. a decrease in the unemployment rate b. general technological advancement c. an increase in consumer wealth Which of the events listed above could cause a movement from V to X ?

a only

An example of a factor of production is

a worker hired by an auto manufacturer.

If society decides it wants more of one good and ________, then it has to give up some of another good and incur some opportunity costs.

all resources are fully utilized

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.

allocative efficiency

What does the term "marginal" mean in economics?

an additional or extra

An outward shift of a nation's production possibilities frontier can occur due to

an increase in the labor force.

A successful market economy requires well defined property rights and

an independent court system to adjudicate disputes based on the law.

Which of the following is part of an economic model?

assumptions

Figure 2-4 Figure 2-4 shows various points on three different production possibilities frontiers for a nation. Refer to Figure 2-4. Consider the following movements:a. from point V to point Wb. from point W to point Yc. from point Y to point ZWhich of the movements listed above represents advancements in technology with respect to both plastic production and food production?

b only

Voluntary exchange increases economic efficiency

because neither the buyer nor the seller would agree to a trade unless they both benefit

Economics is the study of the ________ people make to attain their goals, given their ________ resources.

choices; scarce

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

consumers and producers

Which of the following statements about an entrepreneur is true?

develops the vision for the firm and funds the producing unit

There is often a trade-off between

economic efficiency and economic equity

The primary purpose of patents and copyrights is to

encourage the expenditure of funds on research and development to create new products.

To compete in the automobile market, BMW must make many strategic decisions such as whether to introduce a new car model, whether to produce alternative-fuel vehicles, and where to advertise. At BMW's Spartanburg, South Carolina plant, managers must decide on the monthly production quantities of their X3, X5 ,and X6 models. In making this decision, the managers

face a trade-off, because producing more of one model means producing less of the others

Allocative efficiency is achieved when

firms produce the goods and services that consumers value most

When a celebrity has the desire to have his image protected following his death, this is best described as an example of the protection of

intellectual property.

The branch of economics which studies the behavior of entire economies and policies that affect the economy as a whole is called

macroeconomics

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

marginal benefit; marginal cost

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?

marginal cost

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?

marginal revenue

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

microeconomics

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

negative one half

The ability to exercise control over one's own resources within the confines of the law refers to

one's property rights.

The principle of ________ is that the economic cost of using a factor of production is the alternative use of that factor that is given up.

opportunity cost

Economists assume that

optimal decisions are made at the margin

When you purchase a new surfboard you do so in the

product market.

Competition among sellers generate

productive efficiency

When goods and services are produced at the lowest possible cost, ________ occurs.

productive efficiency

Households

purchase final goods and services in the product market.

Economists assume that rational people

respond to economic incentives

Firms

sell goods in the product market.

A critical function of the government in facilitating the operation of a market economy is

setting up and enforcing private property rights.

Increasing opportunity cost along a bowed out production possibilities frontier occurs because

some factors of production are not equally suited to producing both goods or services.

In the circular flow model, households

spend earnings from resource sales on goods and services in the product market.

Which of the following is an example of an activity undertaken by an entrepreneur?

starting your own snow cone business

The processes used to produce goods and services describes

technology.

Human capital refers to

the accumulated skills and training workers have

Consider the following economic agents: a. the governmentb. consumersc. producers Who, in a modern mixed economy, decides what goods and services will be produced with the scarce resources available in that economy?

the government, consumers and producers

Which of the following is counted as "capital" in economics?

the machines workers have to work with

The production possibilities frontier shows

the maximum attainable combinations of two products that may be produced in a particular time period with available resources.

The circular flow model demonstrates

the roles played by households and firms in the market system.

Without technological advancement, how can a nation achieve economic growth?

through an increase in supplies of factors of production

Scarcity refers to the situation in which

unlimited wants exceed limited resources

The resource income earned by those who supply labor services is called

wages and salaries.