Economics Homework 1

DeShawn's Detailing is a service that details cars at the customers' homes or places of work. DeShawn's cost for a basic detailing package is $40, and he charges $75 for this service. For a total price of $90, DeShawn will also detail the car's engine, a service that adds an additional $20 to the total cost of the package. What is the marginal cost of adding the engine detailing to the basic detailing package

$20

In economics, choices must be made because we live in a world of

B) scarcity.

In the market for factors of production, firms earn income by selling goods and services to households.

False

One desirable outcome of a market economy is that it leads to a more equitable distribution of income.

False

Which of the following is a positive economic statement?

Scarcity necessitates that people make trade-offs.

An economic model is a simplified version of reality used to analyze real-world economic situations.

True

Which of the following is a macroeconomics question?

What determines the inflation rate?

The revenue received from the sale of ________ of a product is a marginal benefit to the firm.

an additional unit

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision?

at least $125,000

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

consumers and firms choosing which goods and services to buy or produce.

Productive efficiency is achieved when

firms produce goods and services at the lowest cost.

Where do economic agents such as individuals, firms and nations, interact with each other?

in any arena that brings together buyers and sellers

Economists reason that the optimal decision is to continue any activity up to the point where the

marginal benefit equals the marginal cost.

Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors would be exemplifying the economic idea that

people respond to economic incentives.

By definition, economics is the study of

the choices people make to attain their goals, given their scarce resources.

Who receives the most of what is produced in a market economy?

those who are willing and able to buy them

Economists assume that rational people do all of the following except

undertake activities that benefit others and hurt themselves

Which of the following is a result of a market economy?

voluntary exchange

Society faces a trade-off in all of the following situations except

when some previously unemployed workers find jobs.