Quiz 1 MICRO-ECON

In economics, the term ________ means "additional" or "extra."

marginal

Which of the following is a microeconomic question?

will the merger of american airlines and US Airways increase or decrease airfares?

Refer to the Article Summary. The article discusses income inequality and how economic growth alone has not resulted in a more equitable distribution of income. If governments increased equity by reducing the incomes of high-income people and increasing the incomes of the poor, would it be possible that fewer goods and services would be produced and less saving would take place?

(maybe Yes-tradeoff btw two)

Pookie's Pinball Palace restores old Pinball machines. Pookie has just spent $300 purchasing and cleaning a 1960s-era machine which he expects to sell for $2,000 once he is finished with the restoration. After having spent $300, Pookie discovers that he will need to rewire the entire machine at a cost of $1,100 in order to finish the restoration. Alternatively, he can sell the machine "as is" now for $1,000. What is the marginal cost of completing the task?

1,100

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?

10$

Which of the following statements is false?

A straight line has a slope of zero.

Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this service. For a total price of $175, Allison will apply a fancier 3-color pinstripe application to an automobile, a service that adds an additional $40 to the total cost of the package. Should Allison continue to offer the 3-color pinstripe application?

A) Yes, she still makes a profit by selling the 3-color application.

Which of the following statements about scarcity is true?

Scarcity refers to a situation in which unlimited wants exceed limited resources

Consider the following statements: a. Consumers buy more MP3 players from an electronics store that sells MP3 players at a lower price than other rival electronics stores in the area. b. Schools take steps to increase security since they believe it is more costly to allow vandalism than to hire additional security guards. c. Citrus growers produce more oranges when the selling price of oranges falls. Which of the above statements demonstrates that economic agents respond to incentives?

a and b

Of the following examples, which would likely be performed by an economist working for Apple?

all of these

Which of the following statements is true?

govt policymakers, business managers, and individuals can all improve decision making by using economic principles

Refer to Scenario 1-2. Using marginal analysis terminology, another economic term for the incremental cost of producing the last 300 hats is

marginal cost

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

money

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. Should DeShawn continue to offer the engine detailing service?

no, his marginal benefit is less than his marginal cost

Which of the following statements about the economic decisions consumers, firms, and the government have to make is false?

only individuals face scarcity; firms and govt do not. (false)

All of the following are part of an economic model except

opinions

Which of the following is a normative economic statement?

pharmaceutical manufacturers should not be allowed to patent their products so prescription drugs would be more affordable

The machines that workers have to work with are considered

physical capital

Economists assume that rational people do all of the following except

undertake activities that benefit others and hurt themselves

Marginal analysis involves undertaking an activity

until its marginal benefits = marginal costs