Deck 1: Economics: Foundations and Models

Question 1

Your roommate,Serafina,a psychology major,said,"The problem with economics is that it assumes that consumers and firms always make the correct decision.But we know that everyone's human,and we all make mistakes." Do you agree with her comment?

A)Yes,I agree with her.One cannot make predictions about economic behavior because in reality people make incorrect choices in many situations.
B)I disagree with her.Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally,meaning they make the best decisions given their knowledge of the costs and benefits.
C)Yes,I agree with her.Economic theory should allow for irrational behavior so that we can have more reliable predictions.
D)I disagree with her.If we cannot assume that decisions are correct,then we will not be able to examine the moral implications of these decisions.

Answer 1

I disagree with her.Economics does not study correct or incorrect behaviors but rather it assumes that economic agents behave rationally,meaning they make the best decisions given their knowledge of the costs and benefits.

Question 2

The basic economic problem of scarcity

A)has always existed and will continue to exist.
B)will eventually disappear as technology continues to advance.
C)is a problem only in developing economies.
D)does not apply to the wealthy in society.

Answer 2

has always existed and will continue to exist.

Question 3

Consider the following statements: a.Consumers rent more kayaks from a vendor that rents kayaks at a lower price than other rival kayak vendors along Waikiki beach.
B.Department stores take steps to increase security since they believe it is more costly to allow shoplifting than to install expensive security monitoring equipment.
C.Farmers produce more cotton when its selling price 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.
E)a,b,and c.

Answer 3

a and b.

Question 4

One reason some manufacturing companies began moving production to China in the early 2000s was due to lower wages that could be paid to Chinese workers.Moving manufacturing to China to take advantage of lower wages so goods could be produced at a lower cost than if produced in the United States exemplifies which key economic idea?

A)People are rational.
B)People respond to economic incentives.
C)Optimal decisions are made at the margin.
D)The market system relies on the principle of voluntary exchange.

Question 5

Scarcity refers to the situation in which

A)unlimited wants exceed limited resources.
B)unlimited resources exceed limited wants.
C)a country's population is larger than its resource base.
D)a nation's poverty level increases faster than its population.

Question 6

Holding all other personal characteristics-such as age,gender,and income-constant,economists would expect that

A)people without health insurance will be less likely to be overweight than people with health insurance.
B)people without health insurance will be more likely to be overweight than people with health insurance.
C)people without health insurance will be equally likely to be overweight as people with health insurance.
D)there is no correlation between not having health insurance and being overweight.

Question 7

Economists assume that rational people

A)never use all available information as they act to achieve their goals.
B)undertake activities that benefit others and hurt themselves.
C)only weigh the benefits and costs of the most desirable alternative actions.
D)respond to economic incentives.

Question 8

Economics promotes which of the following as the way to make the best decision?

A)Continue an enjoyable activity as long as you do not have to pay for it.
B)Continue an enjoyable activity until it is no longer enjoyable.
C)Continue an enjoyable activity until you cannot afford to pursue it.
D)Continue an enjoyable activity up to the point where its marginal benefit equals its marginal cost.

Question 9

Economics is the study of the ________ people make to attain their goals,given their ________ resources.

A)purchases; unlimited
B)choices; scarce
C)income; available
D)decisions; household

Question 10

An office supply store sells a ream of printer paper at a fixed price of $4.50.Which of the following is a term used by economists to describe the money received from the sale of an additional ream of paper?

A)marginal revenue
B)gross earnings
C)pure profit
D)marginal costs
E)net benefit

Question 11

Which of the following best describes an assumption economists make about human behavior?

A)They assume that individuals act rationally all the time in all circumstances.
B)They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.
C)They assume that people take into account the question of fairness in all decisions they make.
D)They assume that individuals act randomly.

Question 12

According to the Centers for Disease Control and Prevention,________ in 2015 in which less than 20 percent of the population was considered obese.

A)Colorado was the only state
B)there were only 5 states
C)there were more than 25 states
D)there were no states

Question 13

One reason some manufacturing companies have moved production from overseas locations back to the United States is an increasing preference by U.S.consumers for products made in the United States.Assuming that managers at these companies used all available information,including the increased preference by U.S.consumers for domestically produced,when making the decision to move production back to the United States exemplifies which key economic idea?

A)People are rational.
B)People respond to economic incentives.
C)Optimal decisions are made at the margin.
D)The market system relies on the principle of voluntary exchange.

Question 14

In 2017,President Trump considered imposing a tariff on automobiles assembled by U.S.manufacturers in Mexico that were to be sold in the United States.If this tariff was imposed and as a result,some of these manufacturers moved their automobile assembly from Mexico back to the United States,these firms would be reacting to which of the three key economic ideas?

A)Firms attempt to maximize revenues.
B)Optimal decisions are made at the margin.
C)People are rational.
D)People respond to economic incentives.

Question 15

In the first six months of 2003,branches of Commerce Bank in New York City were robbed 14 times.The New York City Police recommended steps the bank could take to deter robberies,including the installation of plastic barriers called "bandit barriers." The police were surprised the bank did not take their advice.According to a deputy commissioner of police,"Commerce does very little of what we recommend.They've told our detectives they have no interest in ever putting in the barriers." It would seem that Commerce Bank would have a strong incentive to install "bandit barriers" to deter robberies.Why wouldn't they do it?

A)The banks would rather delay installation of any theft deterring equipment in anticipation of new,lower-cost innovations in the security devices market.
B)The banks must have weighed the cost of installing bandit barriers against the benefits and decided that they have "no interest in ever putting in the barriers."
C)The banks are concerned that "bandit barriers" would send the wrong message to customers-that the bank is unsafe.
D)The banks probably resent any interference from the police department.

Question 16

Economists assume that

A)individuals behave in unpredictable ways.
B)consumer behavior is explained by the existence of unlimited resources.
C)people put other people's interests ahead of their own.
D)optimal decisions are made at the margin.

Question 17

What is an economic model?

A)It is a description of an economic issue that includes all possible related information.
B)It is a description of an economic issue based on official government information.
C)It is a detailed version of some aspect of economic life used to analyze an economic issue.
D)It is a simplified version of some aspect of economic life used to analyze an economic issue.

Question 18

What does the term "marginal" mean in economics?

A)the edge of a market
B)an additional or extra
C)illegal
D)secondary
E)trivial

Question 19

The term "market" in economics refers to

A)a place where money changes hands.
B)a legal institution where exchange can take place.
C)a group of buyers and sellers of a product and the arrangement by which they come together to trade.
D)an organization which sells goods and services.

Question 20

The study of economics arises due to

A)money.
B)scarcity.
C)greed.
D)resources.

Question 21

Table 1-1
Eva runs a small bakery in the village of Roggerli.She is debating whether she should extend her hours of operation.Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above.She would have to hire a worker for those hours at a wage rate of $12 per hour.
Refer to Table 1-1.What is Eva's marginal cost if she decides to stay open for two hours instead of one hour?

A)$12
B)$24
C)$36
D)$71

Question 22

The cost incurred from the production of an additional unit of a product

A)is a marginal cost to the firm.
B)is called a loss.
C)is called opportunity cost.
D)must be zero for a firm to be efficient.

Question 23

Marginal cost is the ________ associated with a particular increase in an activity.

A)total cost
B)additional cost
C)opportunity cost
D)forgone cost

Question 24

Table 1-1
Eva runs a small bakery in the village of Roggerli.She is debating whether she should extend her hours of operation.Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above.She would have to hire a worker for those hours at a wage rate of $12 per hour.
Refer to Table 1-1.Using marginal analysis,how many hours should Eva extend her bakery's hours of operations?

A)2 hours
B)3 hours
C)4 hours
D)5 hours
E)6 hours

Question 25

Lionel's Lawn Care is a company that maintains residential yards.Lionel's cost for his standard package of mowing,edging,and trimming is $15,and he charges $25 for this service.For a total price of $40,Lionel will also trim shrubs,a service that adds an additional $10 to the total cost of the standard package.Should Lionel continue to offer the shrub-trimming service?

A)yes,his marginal benefit is greater than his marginal cost
B)yes,but only if he raises the price of the standard package
C)no,his marginal benefit is less than his marginal cost
D)More information is needed for Lionel to make this decision.

Question 26

________ involves undertaking an activity until its marginal benefits equal marginal costs.

A)Scarcity reduction
B)Central planning
C)Marginal analysis
D)Market intervention

Question 27

If the marginal cost of producing a television is constant at $200,then a firm should produce this item

A)only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin.
B)as long as the marginal benefit it receives is just equal to or greater than $200.
C)as long as its marginal cost does not rise.
D)until the marginal benefit it receives reaches zero.

Question 28

Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes,"Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800,we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts."
Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 400 t-shirts?

A)marginal cost
B)operating cost
C)explicit cost
D)Any of the above terms are correct.

Question 29

Lionel's Lawn Care is a company that maintains residential yards.Lionel's cost for his standard package of mowing,edging,and trimming is $15,and he charges $25 for this service.For a total price of $40,Lionel will also trim shrubs,a service that adds an additional $10 to the total cost of the standard package.What is Lionel's marginal benefit if he sells the standard package?

A)$10
B)$15
C)$25
D)$40

Question 30

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What is her marginal benefit if she sells the quilt "as is" now?

A)$100
B)$900
C)She makes a marginal loss of $600,not a marginal benefit.
D)The marginal benefit cannot be determined.

Question 31

If the marginal cost for the state of Montana to increase the speed limit on its interstate highways to 100 mph is estimated to be $500 per day,then Montana should increase the speed limit to 100 mph

A)only if the marginal benefit received each day is less than $500.
B)as long as the marginal benefit received each day is just equal to or greater than $500.
C)as long as the daily marginal cost is lower than it had been before the speed limit increase.
D)unless the marginal benefit received falls to zero.

Question 32

Which of the following is an example of a "how much" decision?

A)Octavia is debating whether to buy a pair of Jimmy Choo shoes or Steve Madden boots.
B)Humberto has taken a second job to earn money to buy a Harley-Davidson SuperLow Sportster.
C)You plan on going to Las Vegas for your birthday and are deciding if you should fly or drive.
D)Diana is trying to decide if she should open her pet shop on Sundays.

Question 33

Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes,"Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800,we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts."
Refer to Scenario 1-1.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 400 t-shirts?

A)gross earnings
B)marginal revenue
C)sales revenue
D)gross profit

Question 34

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What is the marginal cost of completing the task?

A)$200
B)$500
C)$1,000
D)$1,000 plus the value of her time

Question 35

Which of the following is an example of a "how much" decision?

A)The Pleasantville movie theatre is open only in the evenings.The theatre's manager is debating whether to add daily matinee shows.
B)The Zhous have demolished their old home and are debating whether to build a ranch-style house or a Craftsman home.
C)You're planning to hold a graduation party and must decide between having your party catered or having a pot-luck.
D)Chelsea has withdrawn from the swim team to take a full-time job.

Question 36

Lionel's Lawn Care is a company that maintains residential yards.Lionel's cost for his standard package of mowing,edging,and trimming is $15,and he charges $25 for this service.For a total price of $40,Lionel will also trim shrubs,a service that adds an additional $10 to the total cost of the standard package.What is Lionel's marginal cost of adding the shrub-trimming service to the standard package?

A)$10
B)$15
C)$25
D)$40

Question 37

Table 1-1
Eva runs a small bakery in the village of Roggerli.She is debating whether she should extend her hours of operation.Eva figures that her sales revenue will depend on the number of additional hours the bakery is open as shown in the table above.She would have to hire a worker for those hours at a wage rate of $12 per hour.
Refer to Table 1-1.What is Eva's marginal benefit if she decides to stay open for two hours instead of one hour?

A)$25
B)$36
C)$60
D)$95

Question 38

The revenue received from the sale of an additional unit of a product

A)is a marginal benefit to the firm.
B)is called profit.
C)is called gross sales.
D)is called a net gain.

Question 39

Cassie's Quilts alters,reconstructs,and restores heirloom quilts.Cassie has just spent $800 purchasing,cleaning,and reconstructing an antique quilt which she expects to sell for $1,500 once she is finished.After having spent $800,Cassie discovers that she would need some special period fabric that would cost her $200 in material and time in order to complete the task.Alternatively,she can sell the quilt "as is" now for $900.What should she do?

A)She should cut her losses and sell the quilt now.
B)It does not matter what she does; she is going to take a loss on her project.
C)She should purchase the period fabric,complete the task and then sell the quilt.
D)She should not do any more work on the quilt because she has already spent too much time on it and has not been paid for that time.

Question 40

Scenario 1-1
Suppose a t-shirt manufacturer currently sells 5,000 t-shirts per week and makes a profit of $10,000 per week.A manager at the plant observes,"Although the last 400 t-shirts we produced and sold increased our revenue by $4,000 and our costs by $4,800,we are still making an overall profit of $10,000 per week so I think we're on the right track.We are producing the optimal number of t-shirts."
Refer to Scenario 1-1.Had the firm not produced and sold the last 400 t-shirts,would its profit be higher or lower,and if so by how much?

A)Its profit would be $4,800 higher.
B)Its profit would be $800 higher.
C)Its profit would be $800 lower.
D)Its profit would be $4,000 lower.

Question 41

Scenario 1-2
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes,"Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000,we are only making an overall profit of $3,000 per week so I think we need to cut back on production.
Refer to Scenario 1-2.Using marginal analysis terminology,what is another economic term for the incremental revenue received from the sale of the last 500 cigars?

A)gross earnings
B)marginal revenue
C)sales revenue
D)gross profit

Question 42

Table 1-2
Julius runs a small tailor shop in the city of Bloomfield.He is debating whether he should extend his hours of operation.Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $18 per hour.
Refer to Table 1-2.What is Julius's marginal benefit if he decides to stay open for three hours instead of two hours?

A)$15
B)$25
C)$65
D)$80

Question 43

Scenario 1-2
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes,"Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000,we are only making an overall profit of $3,000 per week so I think we need to cut back on production.
Refer to Scenario 1-2.Had the firm not produced and sold the last 500 cigars,would its profit be higher or lower,and if so by how much?

A)Its profit would be $500 higher.
B)Its profit would be $1,000 higher.
C)Its profit would be $500 lower.
D)Its profit would be $1,500 lower.

Question 44

Suppose the U.S.government encouraged new teachers to take jobs in underperforming schools by paying the new teachers a $20,000 bonus.These teachers would be exemplifying the economic idea that

A)people are rational.
B)people respond to economic incentives.
C)optimal decisions are made at the margin.
D)equity is more important than efficiency.

Question 45

Table 1-2
Julius runs a small tailor shop in the city of Bloomfield.He is debating whether he should extend his hours of operation.Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $18 per hour.
Refer to Table 1-2.Using marginal analysis,how many hours should Julius extend his shop's hours of operations?

A)2 hours
B)3 hours
C)4 hours
D)5 hours
E)6 hours

Question 46

Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.What is his marginal cost to complete the restoration?

A)$75
B)$125
C)$200
D)$300

Question 47

As population declines,scarcity eventually disappears.

Question 48

Scenario 1-2
Suppose a cigar manufacturer currently sells 1,500 cigars per week and makes a profit of $3,000 per week.The plant foreman observes,"Although the last 500 cigars we produced and sold increased our revenue by $7,500 and our costs by $7,000,we are only making an overall profit of $3,000 per week so I think we need to cut back on production.
Refer to Scenario 1-2.Using marginal analysis terminology,what is another economic term for the incremental cost of producing the last 500 cigars?

A)marginal cost
B)operating cost
C)explicit cost
D)Any of the above terms are correct.

Question 49

Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.What should he do?

A)He should sell the weather vane now to make the most profit.
B)It does not matter what he does; he is going to take a loss on the project.
C)He should finish the restoration and then sell the weather vane.
D)He should sell the weather vane back to the party he purchased it from and cut his losses.

Question 50

Fiona shares an office with her ex-husband.Her share of the rent and utilities is $625 per month.She is considering moving to a home office which she will not have to share with anyone.The home office will not cost her anything as far as extra rent or utilities.Recently,you ran into Fiona at the gym and she tells you that she has moved into her home office.Fiona is as rational as any other person.As an economics major,you rightly conclude that

A)Fiona did not have a choice; her ex-husband was a jerk.
B)Fiona figures that the additional benefit of having her own office (as opposed to sharing)is at least $625.
C)Fiona figures that the benefit of having her own office (as opposed to sharing)is zero,since she is no longer paying rent and utilities.
D)The cost of having one's own space outweighs the benefits.

Question 51

Table 1-3
Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour.
Refer to Table 1-3.What is Ivan's marginal benefit if he decides to stay open for six hours instead of five hours?

A)$10
B)$20
C)$30
D)$91.67

Question 52

Zane's Vanes is a service that restores old weather vanes.Zane has just spent $125 purchasing a 1920s-era weather vane which he expects to restore and sell for $500 once the work is completed.After having spent $125,Zane realizes that he will need to spend an additional $200 on materials to complete the restoration.Alternatively,he can sell the weather vane without restoring it for $200.What is his marginal benefit if he sells the weather vane without restoring it?

A)$75
B)$125
C)$200
D)$300

Question 53

Table 1-2
Julius runs a small tailor shop in the city of Bloomfield.He is debating whether he should extend his hours of operation.Julius figures that his sales revenue will depend on the number of additional hours the tailor shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $18 per hour.
Refer to Table 1-2.What is Julius's marginal cost if he decides to stay open for three hours instead of two hours?

A)$0
B)$18
C)$54
D)$65

Question 54

The sales revenue a seller receives from the sale of an additional unit of goods is called the marginal cost.

Question 55

Table 1-3
Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour.
Refer to Table 1-3.What is Ivan's marginal cost if he decides to stay open for six hours instead of five hours?

A)$10
B)$20
C)$25
D)$91.67

Question 56

All economic questions arise from the fact that resources are scarce.

Question 57

Consider the following statements: a.Soda drinkers purchase more soda from a grocery store that sells soda at a lower price than other rival grocery stores in the area.
B.Homeowners do not take steps to increase security even though they believe it is more costly to allow burglaries than to install security monitoring equipment.
C.Manufacturers produce less of a particular cell phone when its selling price rises.
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.
E)a,b,and c.

Question 58

Tabitha shares a flea market booth with her sister.Her share of the rent is $150 per month.She is considering moving to her own,larger booth which she will not have to share with anyone.The larger booth rents for $450 per month.Recently,you ran into Tabitha in the grocery store and she tells you that she has rented the larger booth.Tabitha is as rational as any other person.As an economics major,you rightly conclude that

A)Tabitha did not have a choice; her sister was overcharging her.
B)Tabitha figures that the additional benefit of having her own booth (as opposed to sharing)is at least $300.
C)Tabitha figures that the additional benefit of having her own booth (as opposed to sharing)is at least $450.
D)the cost of having one's own booth outweighs the benefits.

Question 59

Table 1-3
Ivan runs a custom jewelry shop in Sparkle City.He is debating whether he should extend his hours of operation.Ivan figures that his sales revenue will depend on the number of additional hours the jewelry shop is open as shown in the table above.He would have to hire a worker for those hours at a wage rate of $25 per hour.
Refer to Table 1-3.Using marginal analysis,how many hours should Ivan extend his hours of operations?

A)2 hours
B)3 hours
C)4 hours
D)5 hours
E)6 hours

Question 60

The term "market" refers only to trading arrangements that have been approved by the government.

Question 61

If it costs Vijay $150 to design 5 Web sites and $175 to design 6 Web sites,then $175 is the marginal cost of producing the 6th Web site.

Question 62

Describe what has happened to state obesity rates in the United States since 1994.

Question 63

Every society faces economic trade-offs.This means

A)some people live better than others do.
B)not everyone can have enough goods to survive.
C)producing more of one good means less of another good can be produced.
D)society's output cannot be made available to all.

Question 64

An economic model is a complex version of reality used to analyze real-world economic situations.

Question 65

Which of the following statements is false?

A)Anytime you have to decide which action to take you are facing an economic trade-off.
B)Trade-offs do not apply when the consumers purchase a product for which there is excess supply,such as a stock clearance sale.
C)Every individual,no matter how rich or poor,is faced with making trade-offs.
D)Economics is a social science that studies the trade-offs we are forced to make because of scarcity.

Question 66

Suppose the extra annual cost to a nation to enact a mandatory seat belt law for motorcycles is $850.Then,the nation should enact this seat belt law if doing so results in an additional benefit of $850 or more each year.

Question 67

Opportunity cost is defined as

A)the benefit of an activity.
B)the monetary expense associated with an activity.
C)the highest valued alternative that must be given up to engage in an activity.
D)the total value of all alternatives that must be given up to engage in an activity.

Question 68

Suppose the extra cost for a municipality to enact a "no texting while driving" law is $15,000 per year.Then,the municipality should enact the law if it receives a total benefit from all of its traffic laws of $15,000 per year.

Question 69

What is scarcity,and why is it a fundamental concept in economics?

Question 70

Marginal benefit is the benefit that your activity provides to someone else.

Question 71

What does the word "marginal" mean in economics? What is a marginal benefit? What is a marginal cost? What is marginal analysis?

Question 72

Assume that a city can earn an additional $100,000 of revenue each year from using drones to catch speeding drivers.What must the additional cost of using drones to catch speeders be to make this economically rational?

Question 73

Explain the term "economics."

Question 74

Optimal decisions are made at the point where marginal benefit is maximized.

Question 75

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?

A)zero,since he will no longer be earning a salary
B)depends on the "going rate" for stay-at-home dads
C)at least $60,000
D)the value he attributes to the joy of parenting

Question 76

Which of the following is an example of an economic trade-off that a firm has to make?

A)whether it is cheaper to produce with more machines or with more workers
B)deciding why consumers want its products
C)whether or not consumers will buy its products
D)deciding what profit margin it desires for its products

Question 77

The Stogie Shop,a cigar store in the mall,sells hand-rolled cigars for $10.00 and machine-made cigars for $2.50 each.What is the opportunity cost of buying a hand-rolled cigar?

A)4 machine-made cigars
B)one-quarter of a machine-made cigar
C)$10.00
D)$2.50

Question 78

What is an economic market?

Question 79

Trade-offs force society to make choices when answering what three fundamental questions?

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?

Question 80

If it costs Hobie $900 to produce 5 lamps and $1,200 to produce 6 lamps,then the difference of $300 is the marginal cost of producing the 5th lamp.