Microeconomics HW 1

Which of the following is true about scarcity? A. Scarcity refers to the situation in which unlimited wants exceed limited resources B. Scarcity is not a problem for the wealthy C. Scarcity is only a problem when a country has too large a population D. Scarcity arises when there is a wide disparity in income distribution

A. Scarcity refers to the situation in which unlimited wants exceed limited resources

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 DeShawn's marginal benefit if he sells a basic detailing package? A. $35 B. $75 C. He makes a marginal loss of $15, not a marginal benefit D. The marginal benefit cannot be determined

B. $75

Since 1984, obesity rates in the United States A. have been on a slow and steady decline B. have increased in all 50 states C. have primarily increased in the Southeast and remained constant or slightly decreased in the remainder of the country D. have remained fairly constant throughout the country

B. Have increased in all 50 states

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. A. equitably B. rationally C. emotionally D. selfishly

B. Rationally

The three fundamental questions that any economy must address are A. What will be the prices of goods and services; how will these goods and services be produced; and who will receive them? B. What goods and services to produce; how will these goods and services be produced; and who receives them? C. Who gets jobs; what wages do workers earn; and who owns what property? D. How much will be saved; what will be produced; and how can these goods and services be fairly distributed?

B. What goods and services to produce; how will these goods and services be produced; and who receives them?

Thuy Anh runs a small flower shop in the town of Florabunda. She is debating whether she should extend her hours of operation. Thuy Anh figures that her sales revenue will depend on the number of hours the flower shop is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $16 per hour. Refer to Table above. Using marginal analysis, how many hours should Thuy Anh extend her flower shop's hours of operations? A. 2 hours B. 3 hours C. 4 hours D. 5 hours

C. 4 hours

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. A. collective B. cooperative C. market D. trade-off

C. Market

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. a only. B. b only. C. c only. D. a and b.

D. a and b