ECON. CH. 1
DeShawn's Detailing is a service that details cars at the consumers' homes or placeof 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 DeShawn's marginal benefit if he sells a basic detailing package?
$75
Consider the following statements:
A) Car owners purchase... B) banks do not take.. C) firms produce more..
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 sttores in the area. B) schools take steps to increase security since they believe it is more costly to allow vadalism than to hire additional security gaurds
Consider the following economic agents: a. the goverment b. consumers c. producers
All; gov't, consumers,and producers.
The revenue received from the same of ______ of a product is a marginal benefit to the firm.
An additional unit
Economists assume that individuals
Are rational and respond to incentives
Making "how much" decisions invlolve
Determining the additional benefits and the additional costs of that activity
Which of the following is an example of a "how much" deccision?
Dinah's Diner is only open for breakfast and lunch. Dinah is trying to decide whether to open for dinner as well.
Economists assume that rational behavior is useful in explaining choices people make
Even though people may not behave rationally all the time
All economic questions arise from the fact that resources are unlimited
False
Optimal decisions are made at the point where marginal cost equals zero
False
Scarcity is a problem that will eventually disapear as technology advances
False
Since 1994, obesity rates in the United States
Have increased in all 50 states
Where do economic agents such as individuals, firms and nations, interact with each other?
In any arena that brings together buyers and sellers
In economics, the term ______ means "additional" or "extra"
Marginal
Economists reason that the optimal decision is to continue any activity up to the point where the
Marginal benefit equals the marginal cost
The extra cost associated with undertaking an activity is called
Marginal cost
A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the same of an additional bag of potatoes?
Marginal revenue
The term ______ in economics refers to a group of buyers and sellers of a product and the arrangement by which they come together to trade
Market
An economic ______ is a simplified version of some aspect of economic life used to analyze economic issue
Model
Recent changes occuring with the U.S. health care system, including lower insurance reimbursment rates, have resulted in
More medical practices being owned by hospitals than by individual doctors
The highest bmvalued alternative that must be given up to engage in an activity is the defintion of
Opportunity cost
Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are exemplifying the economic idea that
People are rational
Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their goals, these teachers are exemplifying the economic idea that
People are rational
Suppose the U.S. government encouraged consumers to trade in their old automobiles for efficient, new models by paying up to $5,000 for the old automobiles. These consumers would be exemplifying the economic idea that
People respond to economic incentives
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
Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that
People with health insurance will be more likely to be overweight than people without health insurance
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
In economics, choices must be made because we live in a world of
Scarcity
The basis economic problem of _______ has always existed and will continue to exist.
Scarcity
Which of the following statements is true about scarcity?
Scarcity refers to the situation in which unlimited wants exceed limited resources
By definition, economics is the study of
The choices people make to attain their goals, given their scarce resources
The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the econmic concept of
Trade-off
An economic model is a simplified version of reality used to analyze real-world economic situations
True
Even if the population declines, scarcity Wil still exist
True
If it costs Danitra $225 to create 4 necklaces and $275 to create t necklaces, then $50 is the marginal cost of producing the 5th necklace
True
If it costs Sinclair $300 to produce e suede jackets and $420 to produce 4 suede jackets, then the difference of $120 is the marginal cost of producing the 4th suede jacket
True
Marginal benefit refers to the additional benefit that your activity provides to you
True
Scarcity refers to a situation in which unlimited wants exceed the limited resource available to fullfil those wants
True
Suppose the extra cost for a doctor to keep his office open for one extra hour is $200. Then, the doctor should stay open for the extra hour even if he can generate additional revenue of $200 for that hour.
True
Suppose the extra cost to a doctor of keeping his office open on Saturday's is $1,200. Then, the doctor should stay open on Saturday's if keeping the office open brings in additional revenue of $1,200 or more
True
The additional cost to a producer of hiring an additional unit of labor is called the marginal cost
True
The sales revenue a seller receives from the same of an additional unit of goods is called the marginal benefit
True
The term "market" refers to trading arrangements by which buyers and sellers come together
True
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 it's marginal benefits equal marginal cost
Making optimal decisions "at the margin" requires
Weighing the costs and benefits of a decision before deciding if it should be pursued
The three fundamental questions that any economy must address are
What goods and services to produce: how will these goods and services be produced; and who received them?
Society faces a tade-off in all of the following situations except
When some prerviously unemployed workers find jobs
The distribution of income determined which of the fundamental economic questions?
Who will receive goods and services produced?