Q&A Hero

Q: Table 1-2Hours OpenTotal Revenue (dollars)1$2524537049051056110Thuy 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 1-2. What is Thuy Anh's marginal benefit if she decides to stay open for three hours instead of two hours?A) $0B) $20C) $25D) $45E) $70

Q: Table 1-2Hours OpenTotal Revenue (dollars)1$2524537049051056110Thuy 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 1-2. Using marginal analysis, how many hours should Thuy Anh extend her flower shop's hours of operations?A) 2 hoursB) 3 hoursC) 4 hoursD) 5 hoursE) 6 hours

Q: Table 1-1Hours OpenTotal Revenue (dollars)1$50275395411051206125Lydia 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 hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.Refer to Table 1-1. What is Lydia's marginal cost if she decides to stay open for two hours instead of one hour?A) $10B) $20C) $25D) $40

Q: Table 1-1Hours OpenTotal Revenue (dollars)1$50275395411051206125Lydia 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 hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.Refer to Table 1-1. What is Lydia's marginal benefit if she decides to stay open for two hours instead of one hour?A) $25B) $50C) $75D) $125

Q: Table 1-1Hours OpenTotal Revenue (dollars)1$50275395411051206125Lydia 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 hours the nail salon is open as shown in the table above. She would have to hire a worker for those hours at a wage rate of $10 per hour.Refer to Table 1-1. Using marginal analysis, how many hours should Lydia extend her nail salon's hours of operations?A) 2 hoursB) 3 hoursC) 4 hoursD) 5 hoursE) 6 hours

Q: Scenario 1-1 Suppose a cell phone manufacturer currently sells 20,000 cell phones 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 Scenario 1-1. Had the firm not produced and sold the last 3,000 cell phones, would its profit be higher or lower, and if so by how much? A) Its profit will be $6,700 higher. B) Its profit will be $700 higher. C) Its profit will be $700 lower. D) Its profit will be $6,000 lower.

Q: Scenario 1-1 Suppose a cell phone manufacturer currently sells 20,000 cell phones 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 Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental cost of producing the last 3,000 cell phones? A) marginal cost B) operating cost C) explicit cost D) Any of the above terms are correct.

Q: Scenario 1-1 Suppose a cell phone manufacturer currently sells 20,000 cell phones 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 Scenario 1-1. Using marginal analysis terminology, what is another economic term for the incremental revenue received from the sale of the last 3,000 cell phones? A) gross earnings B) marginal revenue C) sales revenue D) gross profit

Q: Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this 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. Should Allison continue to offer the 3-color pinstripe application? A) yes, she still makes a profit by selling the 3-color application. B) yes, but only if she lowers the price of the 1-color application C) no, her marginal benefit is less than her marginal cost D) More information is needed for Allison to make this decision.

Q: Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this 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? A) $35 B) $40 C) $80 D) $175

Q: Allison's Auto Art is a company that applies pinstripes to vehicles. Allison's cost for a basic 1-color pinstriping job is $35, and she charges $95 for this 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 Allison's marginal benefit if she sells a basic 1-color job? A) $35 B) $60 C) $95 D) The marginal benefit cannot be determined.

Q: 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. Should DeShawn continue to offer the engine detailing service? A) yes, he still makes a profit by selling the engine detailing service with the basic detailing package B) yes, but only if he raises the price of the basic detailing package C) no, his marginal benefit is less than his marginal cost D) More information is needed for DeShawn to make this decision.

Q: 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 the marginal cost of adding the engine detailing to the basic detailing package? A) $20 B) $30 C) $60 D) $60 plus the value of his time

Q: 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.

Q: The extra cost associated with undertaking an activity is called A) net loss. B) marginal cost. C) opportunity cost. D) foregone cost.

Q: Making "how much" decisions involve A) calculating the total benefits of the activity and determining if you are satisfied with that amount. B) calculating the total costs of the activity and determining if you can afford to incur that expenditure. C) calculating the average benefit and the average cost of an activity to determine if it is worthwhile undertaking that activity. D) determining the additional benefits and the additional costs of that activity.

Q: Making optimal decisions "at the margin" requires A) making decisions according to one's whims and fancies. B) making consistently irrational decisions. C) weighing the costs and benefits of a decision before deciding if it should be pursued. D) making borderline decisions.

Q: The revenue received from the sale of ________ of a product is a marginal benefit to the firm. A) an additional unit B) the total number of units C) no units D) only profitable units

Q: Marginal analysis involves undertaking an activity A) until its marginal costs start declining. B) only when its marginal benefits are positive. C) until its marginal benefits equal marginal costs. D) only if its marginal costs are greater than its marginal benefits.

Q: Economists reason that the optimal decision is to continue any activity up to the point where the A) marginal benefit is zero. B) marginal benefit is greater than the marginal cost. C) marginal cost is zero. D) marginal benefit equals the marginal cost.

Q: A grocery store sells a bag of potatoes at a fixed price of $2.30. Which of the following is a term used by economists to describe the money received from the sale of an additional bag of potatoes? A) marginal revenue B) gross earnings C) pure profit D) marginal costs E) net benefit

Q: In economics, the term ________ means "additional" or "extra." A) allocative B) marginal C) equity D) optimal

Q: Since 1994, 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.

Q: Holding all other personal characteristics-such as age, gender, and income-constant, economists would expect that A) people with health insurance will be less likely to be overweight than people without health insurance. B) people with health insurance will be more likely to be overweight than people without health insurance. C) people with health insurance will be equally likely to be overweight as people without health insurance. D) there is no correlation between having health insurance and being overweight.

Q: Suppose the U.S. government encouraged consumers to trade in their old automobiles for more efficient, new models by paying up to $5,000 for the old automobiles. These consumers 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.

Q: Suppose the U.S. government encouraged new medical school graduates to take over existing practices from doctors wishing to retire by paying both the new and retiring doctors $100,000. These doctors 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.

Q: Suppose that some investors have decided that economic and financial uncertainty have made the prospect of investing in domestic stock markets more risky than investing in foreign stock markets, and therefore choose to invest in foreign markets. By using all available information as they act to achieve their goals, these investors are 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.

Q: Suppose that some teachers have decided that economic and financial uncertainty have made the prospect of retiring more risky, and therefore carry a higher cost than not retiring. By using all available information as they act to achieve their goals, these teachers are 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.

Q: Consider the following statements: a. Car owners purchase more gasoline from a gas station that sells gasoline at a lower price than other rival gas stations in the area. b. Banks do not take steps to increase security since they believe it is less costly to allow some bank robberies than to install expensive security monitoring equipment. c. Firms produce more of a particular DVD 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.

Q: 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

Q: Economists assume that rational people do all of the following except A) use all available information as they act to achieve their goals. B) undertake activities that benefit others and hurt themselves. C) weigh the benefits and costs of all possible alternative actions. D) respond to economic incentives.

Q: Economists assume that rational behavior is useful in explaining choices people make A) because irrational people do not make economic choices. B) even though people may not behave rationally all the time. C) because individuals act rationally all the time in all circumstances. D) even though people rarely, if ever, behave in a rational manner.

Q: Economists assume that individuals A) behave in unpredictable ways. B) will never take actions to help others. C) prefer to live in a society that values fairness above all else. D) are rational and respond to incentives.

Q: 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

Q: Where do economic agents such as individuals, firms and nations, interact with each other? A) in public locations monitored by the government B) in any arena that brings together buyers and sellers C) in any physical location people where people can physically get together for selling goods, such as shopping malls D) in any location where transactions can be monitored by consumer groups and taxed by the government

Q: An economic ________ is a simplified version of some aspect of economic life used to analyze an economic issue. A) market B) trade-off C) variable D) model

Q: By definition, economics is the study of A) how to make money in the stock market. B) how to make money in a market economy. C) the choices people make to attain their goals, given their scarce resources. D) supply and demand.

Q: The basic economic problem of ________ has always existed and will continue to exist. A) scarcity B) efficiency C) inflation D) recession

Q: Which of the following statements is trueabout 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.

Q: In economics, choices must be made because we live in a world of A) unemployment. B) scarcity. C) greed. D) unlimited resources.

Q: Recent changes occurring within the U.S. health care system, including lower insurance reimbursement rates, have resulted in A) a growing number of doctor's choosing to open private practices. B) more medical practices being owned by hospitals than by individual doctors. C) a majority of hospitals closing routine medical practices in order to focus only on emergency care facilities. D) a majority of doctors working directly for insurance companies.

Q: Table 1-4YearDVD Recorders (millions)200712.5200814200917.2201020201121.7Refer to Table 1-4. The table above shows the sales of DVD recorders in North America. Present the information using a bar graph.

Q: At a recent company meeting, Ravi Batra, sales manager of Life's a Beach, a surfboard producer announced, "We have increased our sales by 13 percent in just 9 months." Suppose 9 months ago, its sales amounted to $245,000, what is the value of its sales today? A) $31,850 B) $207,638 C) $276,850 D) $359,905

Q: If the price of gasoline was $3.25 a gallon and it is now $3.75 a gallon, what is the percentage change in price? A) 7.1 percent B) 13.3 percent C) 15.4 percent D) 33.3 percent

Q: If a straight line passes through the point x = 24 and y = 8 and also through the point x = 8 and y = 16, the slope of this line is A) negative 8 divided by 4. B) seven tenths. C) negative one half. D) one and one half.

Q: In 2013, Smileytown consumed 12,000 gallons of mouthwash. In 2014, mouthwash consumption rose to 17,000 gallons. Calculate the percentage change in mouthwash consumption. A) 17.2% B) 29.4% C) 41.7% D) 70.6%

Q: You explain to your roommate Surya, who makes beaded headbands, about an economic theory which asserts that consumers will purchase more of a product at lower prices than they will at higher prices. She contends that the theory is incorrect because over the past two years she has lowered the price of her headbands and yet has seen a decrease in sales. How would you respond to Surya? A) Surya is right; she has evidence to back her claim. The theory must be erroneous. B) Surya is making the mistake of assuming that correlation implies causation. C) I will explain to her that she is making the error of reverse causality: it is the decrease in demand that has caused her to lower her prices. D) I will explain to her that there are some omitted variables that have contributed to a decrease in her sales such as changes in income.

Q: The prevalence of Alzheimer's dementia is very high among residents living in nursing homes. A student concludes that it is likely that living in a nursing home causes Alzheimer's dementia. What is the flaw in the student's reasoning? A) The student has failed to take into account other causes of Alzheimer's disease. B) The student is drawing a false conclusion; he is confusing cause and effect. C) The student is using an inadequate sample size. D) The student is drawing a false conclusion by making the mistake of omitting critical variables such as the age and gender of the residents.

Q: ________ is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X. A) The omitted variable B) The positive-to-negative relationship C) Reverse causality D) Nonlinear slope

Q: What is the "omitted variable" problem in determining cause and effect? A) It is a problem that arises when an insignificant variable is given too much weight in an economic analysis leading to skewed conclusions about cause and effect. B) It is a problem that arises when a significant variable is not given enough weight in an economic experiment leading to skewed conclusions about cause and effect. C) It is a problem that arises when an insignificant economic variable that should have been omitted is included in an economic experiment leading to false conclusions about cause and effect. D) It is a problem that arises when an economic variable that affects other variables is omitted from an analysis and its omission leads to false conclusions about cause and effect.

Q: Figure 1-4 Refer to Figure 1-4. Which of the following statements is false? A) The slope of the tangent at E is positive. B) The slope of the tangent at F is negative. C) The slope of the tangent at E and the slope of the tangent at F are equal. D) Neither the slope of the tangent at E nor the slope of the tangent at F are equal to zero.

Q: Figure 1-3 Refer to Figure 1-3. Calculate the area of the trapezoid X. A) $270 B) $720 C) $810 D) $2,520

Q: Figure 1-2 Refer to Figure 1-2. Calculate the area of the triangle A. A) $1.3 million B) $2.6 million C) $3.4 million D) $5.2 million

Q: Figure 1-1 Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2007 and 2011. A) 30% B) 50% C) 66.7% D) 100%

Q: Figure 1-1 Refer to Figure 1-1. Using the information in the figure above, calculate the percentage change in sales of alcoholic beverages between 2008 and 2011. A) 23.1% B) 23.8% C) 30% D) 42.9%

Q: At a recent faculty meeting, Lorraine Waverly, president of Skywalker College, announced that enrollment is up by 12 percent over the previous semester. If enrollment the previous semester was 3,250 students, what is the student enrollment this semester? A) 390 B) 2,860 C) 3,640 D) 4,030

Q: In 2010, Hooverville consumed 205,000 tons of sugar. In 2011, sugar consumption rose to 245,000 tons. Calculate the percentage change in sugar consumption. A) 8.37% B) 11.95% C) 19.51% D) 26.33%

Q: If the price of milk was $2.50 a gallon and it is now $3.25 a gallon, what is the percentage change in price? A) 13 percent B) 30 percent C) 75 percent D) 77 percent

Q: Suppose when the price of laptops fall, college students buy more laptops. This implies that A) there is a positive relationship between laptop prices and quantities purchased by college students. B) there is a negative relationship between laptop prices and quantities purchased by college students. C) there is a direct relationship between laptop prices and quantities purchased by college students. D) there is a one-to-one relationship between laptop prices and quantities purchased by college students.

Q: The relationship between consumer spending and disposable personal income is A) an inverse relationship. B) a direct relationship. C) a negative relationship. D) independent.

Q: Which of the following statements is false? A) An inverse relationship has a negative slope value. B) A direct relationship has a positive slope value. C) A curved line has slope values that change at every point. D) A straight line has a slope of zero.

Q: On a two-dimensional graph, ________ allows for the effects of additional variables. A) moving along a curve B) shifting curves C) eliminating a curve D) adding an additional curve

Q: If a straight line passes through the point x = 14 and y = 3 and also through the point x = 4 and y = 10, the slope of this line is A) negative 11 divided by 6. B) seven tenths. C) negative seven tenths. D) 6 divided by 11.

Q: ________ have a horizontal and a vertical axis and are used in economics to illustrate relationships between two economic variables. A) Two-dimensional graphs B) One-dimensional graphs C) Pie Charts D) Bar graphs

Q: If a graph has a line that shows the amount of outsourcing in the last ten years, it is known as A) a pie chart. B) a time-series graph. C) a demand curve for outsourcing. D) a supply curve of outsourcing.

Q: What is a firm? What other terms do economists use interchangeably with the term "firm"?

Q: What is an entrepreneur, and what decisions does an entrepreneur make in a market system?

Q: What is the difference between goods and services?

Q: Explain the difference between a firm's revenue and its profit.

Q: What is the difference between an invention and an innovation?

Q: List the five main factors of production.

Q: One example of physical capital is the amount of savings that you have.

Q: In the market for factors of production, firms earn income by selling factors of production to households.

Q: One example of human capital is the amount of skills that you have.

Q: In the market for factors of production, firms earn income by selling goods and services to households.

Q: According to census figures and the Congressional Budget Office, the number of people aged 65 and older is projected to ________ and the number of uninsured people is projected to ________ by the year 2020. A) increase; increase B) decrease; increase C) increase; decrease D) decrease; decrease

Q: The U.S. Bureau of Labor Statistics predicts that 9 of the 20 fastest growing occupations over the next ten years will be in A) the medical field. B) the travel and leisure industry. C) education. D) construction.

Q: Households ________ factors of production and ________ goods and services. A) supply; demand B) supply; supply C) demand; supply D) demand; demand

Q: A firm's technology may depend on which of the following factors? A) the skill of its managers B) the training of its workers C) the speed and efficiency of its equipment D) all of the above

Q: All of the following is counted as "capital" in economics except A) money. B) machine tools. C) factory buildings. D) warehouses.