Question 1

What is an economic market?

Accepted Answer

The answer of What is an economic market?...

Question 2

Explain the term "economics."

Accepted Answer

The answer of Explain the term "economics."...

Question 3

Assume that it will cost a plumber an additional $35,000 each year by keeping her shop open for one additional hour per week.What must the additional revenue from keeping the shop open this additional hour per week be to make staying open for the extra hour economically rational?

Accepted Answer

The answer of Assume that it will cost a plumber...

Question 4

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

Accepted Answer

The opportunity cost is the value of the next best alternative foregone, in this case, it is the machine-made cigar. To determine the opportunity cost, we divide the cost of the hand-rolled cigar by the cost of the machine-made cigar: $10.00/$2.50 = 4 machine-made cigars. Therefore, the opportunity cost of buying a hand-rolled cigar is 4 machine-made cigars. So the best choice(s) is A.

Question 5

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

Accepted Answer

An economic model is a simplified version of reality used to analyze real-world economic situations and understand how economies function.

Question 6

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.

Accepted Answer

The difference of $300 is the marginal cost of producing the 6th lamp, not the 5th. The cost given is cumulative, so the marginal cost refers to the cost of producing one more unit beyond what has already been produced.

Question 7

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

Accepted Answer

The answer of What does the word "marginal" mean in...

Question 8

Ted quits his $60,000-a-year job to be a stay-at-home dad.What is the opportunity cost of his decision?
A)0 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

Accepted Answer

The opportunity cost of Ted's decision is the value of the next best alternative that he gave up by quitting his job, which is at least $60,000 per year. This is because he could have continued working and earning a salary of $60,000, but he chose to take care of his children instead. Therefore, the opportunity cost of his decision is the foregone income of $60,000 or more. Option A is incorrect because although he may not earn a salary, there is still a value associated with his time and effort in being a stay-at-home dad. Option B is incorrect because the "going rate" for stay-at-home dads is not relevant to determining the opportunity cost of Ted's decision. Option D is incorrect because the joy of parenting is not a measurable value and cannot be compared to the income he gave up.

Question 9

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.

Accepted Answer

Trade-offs always apply, regardless of the circumstances. Even in a stock clearance sale, a consumer still has to weigh the benefits and costs of purchasing the product.

Question 10

Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.Then,the plumber should not stay open for the extra hour if she can only generate additional revenue of $145 for that hour.

Accepted Answer

If the additional revenue equals the extra cost, the plumber breaks even, meaning there is no financial loss or gain. Therefore, staying open is not disadvantageous.

Question 11

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.

Accepted Answer

Opportunity cost refers to the highest valued alternative that must be given up to engage in an activity. The benefit of an activity (option A) is not the same as opportunity cost, as it refers to the gain from the activity itself rather than what is given up to participate in it. The monetary expense associated with an activity (option B) may be a factor in determining opportunity cost, but it is not the same thing. Option D is incorrect because it suggests that opportunity cost involves giving up the value of all alternatives, which is an overstatement. The correct choice is C.

Question 12

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

Accepted Answer

Optimal decisions are made at the point where marginal benefit equals marginal cost, not where marginal benefit is maximized.

Question 13

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

Accepted Answer

A firm must decide whether it is more cost-effective to produce goods with more machines or more workers. This is an economic trade-off as the firm must weigh the benefits and costs of each option and choose the most efficient production method for their business. The other options listed do not involve economic trade-offs.

Question 14

Who receives the goods and services produced in the United States depends largely on
A)how income is distributed.
B)how the goods and services are produced.
C)what goods and services are produced.
D)government redistribution.

Accepted Answer

The distribution of income determines who receives the goods and services produced in the United States. If income is distributed equally, then everyone would have equal access to goods and services. However, if income is distributed unequally, then some individuals or groups may have limited access to goods and services while others have more.

Question 15

Suppose the extra cost to a doctor of keeping her office open on Saturdays is $800.Then,the doctor should not stay open on Saturdays if keeping the office open can only bring in additional revenue of $800.

Accepted Answer

If the additional revenue equals the extra cost, the doctor breaks even, meaning there is no financial loss or gain. Therefore, the decision to stay open could depend on other factors like patient satisfaction or long-term benefits.

Question 16

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

Accepted Answer

The answer of What is scarcity,and why is it a...

Question 17

Suppose a doctor can earn an additional $10,000 in revenue per year from keeping her office open on Saturdays.What must the additional cost of keeping the office open on Saturdays be to make this decision economically rational?

Accepted Answer

The answer of Suppose a doctor can earn an additional...

Question 18

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

Accepted Answer

The answer of Describe what has happened to state obesity...

Question 19

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?

Accepted Answer

The three fundamental questions of economics are what goods and services to produce, how will they be produced, and who will receive them. Trade-offs arise when society must choose between different options for each of these questions. Option B best reflects these three fundamental questions and allows for society to make trade-offs based on its values and priorities. Option A only addresses prices, which is only one aspect of the what to produce question. Option C only addresses distribution and ownership, which are important but not the only factors to consider. Option D only addresses saving and production, leaving out the crucial question of who will benefit from these goods and services.

Question 20

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.

Accepted Answer

Economic trade-offs refer to the concept of production possibility frontiers, which show the maximum amount of two goods that can be produced given a fixed amount of resources. When society chooses to produce more of one good, it necessarily means that less of another good can be produced. Hence, society faces trade-offs in its decisions about production. Option A is incorrect because economic trade-offs do not necessarily lead to unequal distribution of goods or services within a society. Option B is incorrect because economic trade-offs are concerned with the choice of goods to produce, not with whether everyone has access to basic goods. Option D is incorrect because economic trade-offs do not necessarily affect the availability of goods to every member of society.

Quiz 1: Economics: Foundations and Models

What is an economic market?

Explain the term "economics."

Assume that it will cost a plumber an additional $35,000 each year by keeping her shop open for one additional hour per week.What must the additional revenue from keeping the shop open this additional hour per week be to make staying open for the extra hour economically rational?

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?

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

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.

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

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

Which of the following statements is false?

Suppose the extra cost for a plumber to keep her shop open for one extra hour is $145.Then,the plumber should not stay open for the extra hour if she can only generate additional revenue of $145 for that hour.

Opportunity cost is defined as

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

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

Who receives the goods and services produced in the United States depends largely on

Suppose the extra cost to a doctor of keeping her office open on Saturdays is $800.Then,the doctor should not stay open on Saturdays if keeping the office open can only bring in additional revenue of $800.

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

Suppose a doctor can earn an additional $10,000 in revenue per year from keeping her office open on Saturdays.What must the additional cost of keeping the office open on Saturdays be to make this decision economically rational?

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

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

Every society faces economic trade-offs.This means