Intro to microeconomics Pearson

2) An economic ___________ is a simplified version of some aspect of economic life used to analyze an economic issue

Model

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

1) By definition, economics is the study of

The choices people make to attain their goals, given their scarce resources

Making optimal decisions "at the margin" requires

Weighing the costs and benefits of a decision before deciding if it should be pursued

Allison's Auto Art is a company that applies pinstripes to vehicles. Alison's cost for a basic 1 -color pin-striping job is $35 and she charges $95 for the 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. What is the marginal cost of moving up from the 1- color application to the 3- color application

$40

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 to the right. She would have to hire a worker for those extra hours at a wage rate of $10 per hour

5 hours