UNIT 1 Flashcards
Suppose a cellphone manufacturer currently sells 20,000 cellphones per week and makes a profit of $5,000 per week. A manager at the plant observes, ‘Although the last 3,000 cell phones we produced and sold increased our revenue by $6,000 and our costs by $6,700, we are still making an overall profit of $5,000 per week so I think we’re on the right track. We are producing the optimal number of cell phones.’
Refer to the scenario above. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 3,000 cell phones?
A. operating cost
B. explicit cost
C. marginal cost
D. Any of the above terms are correct.
marginal cost
Tim goes to a design academy to become a toy designer. This is an example of…
A. an investment in physical capital.
B. an increase in labor.
C. entrepreneurship.
D. an investment in human capital.
an investment in human capital
In economics, another term for satisfaction is…
A. utility.
B. scarcity.
C. need.
D. return.
utility
A politician states “taxes should be raised to provide more spending on school lunch programs.” This is…
A. a positive economic statement.
B. a ceteris paribus assumption.
C. a normative economic statement.
D. an economic fact.
a normative economic statement
Because resources are limited…
A. only the very wealthy can get everything they want.
B. firms will be forced out of business.
C. people must make choices.
D. the availability of goods will be limited but the availability of services will not.
people must make choices
“We ought to do more for the education of our children.” Statements using words like ought or should are…
A. empirical statements.
B. irrational statements.
C. normative statements.
D. positive statements.
normative statements
Joe runs a business and needs to decide how many hours to stay open. Figure 2.2 illustrates his marginal benefit of staying open for each additional hour. Suppose that Joe’s marginal cost of staying open per hour is $24. How many hours should Joe stay open? (check MyEconLab for graph)
A. 3 hours
B. 4 hours
C. 5 hours
D. 6 hours
6 hours
Which of the following statements about production possibilities curves is not true?
A. A linear production possibilities curve illustrates the concept of efficiency.
B. A production possibilities curve illustrates the concept of opportunity cost.
C. A production possibilities curve illustrates the concept of scarcity.
D. A linear production possibility curve illustrates the concept of increasing opportunity costs.
a linear production possibility curve illustrates the concept of increasing opportunity costs.
Scarcity exists because
A. people take too much leisure time.
B. some people make bad economic decisions.
C. human wants exceed the resources available to satisfy them.
D. the costs of production are high.
E. some individuals have low income.
human wants exceed the resources available to satisfy them.
The ceteris paribus assumption means
A. more is better.
B. all people are rational.
C. other things equal.
D. people respond to incentives.
other things equal
The principal of optimization at the margin states that:
A. an optimal alternative has the highest net benefits in comparison to other feasible alternatives.
B. moving toward the optimal alternative makes the decision maker better off, and moving away from it makes him worse off
C. an optimal alternative has the least indirect costs in comparison to other feasible alternatives.
D. moving toward the optimal alternative makes the decision maker worse off, and moving away from it, makes the decision maker better off
moving toward the optimal alternative makes the decision maker better off, and moving away from it makes him worse off
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
rationally
The rationality assumption implies that
A. the actions of individuals will never leave them worse off.
B. every individual decision is based on the rules of logic and calculus.
C. individuals will not intentionally make decisions that leave them worse off.
D. the decisions of individuals cannot be improved.
individuals will not intentionally make decisions that leave them worse off
A production possibilities curve…
A. represents all possible combinations of maximum outputs that could be produced, assuming a fixed amount of productive resources of a given quality.
B. defines the maximum quantity of one good or service that can be produced, given that a specific quantity of another is produced.
C. shows the possibilities available for increasing the output of one good or service by reducing the amount of another.
D. All of the above.
All of the above
The ultimate purpose of economics is…
A. to motivate people so they work harder.
B. to teach us how to make money.
C. to enable one to make predictions on what the stock market is going to do.
D. to study how individuals make choices.
to study how individuals make choices
