Econ HW 1

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

False

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? A) $20 B) $30 C) $60 D) $60 plus the value of his time

a

The revenue received from the sale of ________ of a product is a marginal benefit to the firm. A) an additional unit B) the total number of units C) no units D) only profitable units

a

Economists assume that rational people do all of the following except A) use all available information as they act to achieve their goals. B) undertake activities that benefit others and hurt themselves. C) weigh the benefits and costs of all possible alternative actions. D) respond to economic incentives.

b

Where do economic agents such as individuals, firms and nations, interact with each other? A) in public locations monitored by the government B) in any arena that brings together buyers and sellers C) in any physical location people where people can physically get together for selling goods, such as shopping malls D) in any location where transactions can be monitored by consumer groups and taxed by the government

b

Who receives the most of what is produced in a market economy? A) lawmakers and other politically favored groups B) those who are willing and able to buy them C) everyone receives an equal amount D) people who earn the highest incomes

b

Arlene quits her $125,000-a-year job to take care of her ailing parents. What is the opportunity cost of her decision? A) zero, since she will no longer be earning a salary B) It depends on the "going rate" for home-care providers. C) at least $125,000 D) the value she attributes to the satisfaction she receives from taking care of her parents

c

By definition, economics is the study of: how to make money in the stock market. how to make money in a market economy. the choices people make to attain their goals, given their scarce resources. supply and demand.

c

Productive efficiency is achieved when A) firms add a low profit margin to the goods and services they produce. B) firms produce the goods and services that consumers value most. C) firms produce goods and services at the lowest cost. D) there are no shortages or surpluses in the market.

c

Which of the following is a positive economic statement? A) People should not buy SUVs. B) The government should mandate electric automobiles. C) Scarcity necessitates that people make trade-offs. D) Foreign workers should not be allowed to work for lower wages than the citizens of a country.

c

Economists reason that the optimal decision is to continue any activity up to the point where the A) marginal benefit is zero. B) marginal benefit is greater than the marginal cost. C) marginal cost is zero. D) marginal benefit equals the marginal cost.

d

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 hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour. 9) Refer to Table above. Using marginal analysis, determine how many hours should Lydia extend her nail salon's hours of operations? A) 2 hours B) 3 hours C) 4 hours D) 5 hours

d

Society faces a trade-off in all of the following situations except A) when deciding who will receive the goods and services produced. B) when deciding what goods and services will be produced. C) when deciding how goods and services will be produced. D) when some previously unemployed workers find jobs.

d

Which of the following is a result of a market economy? A) environmental protection B) an equal income distribution C) agreement on equity D) voluntary exchange

d

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

false