# Midterm 1

Scarcity refers to the situation in which...
A) unlimited wants exceed limited resources.
B) a country's population is larger than its resource base.
C) a nation's poverty level increases faster than its population.
D) unlimited resources exceed limited wants.
Click the card to flip 👆
1 / 30
Terms in this set (30)
Which of the following best describes an assumption economists make about human behavior?
A) They assume that people take into account the question of fairness in all decisions they make.
B) They assume that individuals act rationally all the time in all circumstances.
C) They assume that individuals act randomly.
D) They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.
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) The market system relies on the principle of voluntary exchange.
B) People respond to economic incentives.
C) People are rational.
D) Optimal decisions are made at the margin.
5) If the marginal cost of producing a television is constant at $200, then a firm should produce this item A) as long as the marginal benefit it receives is just equal to or greater than$200.
B) until the marginal benefit it receives reaches zero.
C) as long as its marginal cost does not rise.
D) only if the marginal benefit it receives is greater than $200 plus an acceptable profit margin. 6) 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) $900 B)$100
C) She makes a marginal loss of $600, not a marginal benefit. D) The marginal benefit cannot be determined. 8) Which of the following is a problem inherent in centrally planned economies? A) There is too much production of low-cost, high-quality goods and services. B) There are no problems and everyone, including consumers, is satisfied. C) Production managers are more concerned with satisfying government's orders than with satisfying consumer wants. D) Unemployment is too high. 7) 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