Quiz 1

Which of the following statements about scarcity is​ true?
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Terms in this set (14)
Which of the following statements about scarcity is​ true?
Scarcity refers to the situation in which unlimited wants exceed limited resources.
By​ definition, economics is the study of
the choices people make to attain their​ goals, given their scarce resources.
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
people are rational.
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
people respond to economic incentives.
Making​ "how much" decisions involves
determining the additional benefits and the additional costs of that activity.
Thuy 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 extra hours the flower shop is open as shown in the table to the right. She would have to hire a worker for those extra hours at a wage rate of​ $16 per hour.
Using marginal​ analysis, by how many hours should Thuy Anh extend her flower​ shop's hours of​ operations?
4 hours
Image: Thuy 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 extra hours the flower shop is open as shown in the table to the right. She would have to hire a worker for those extra hours at a wage rate of​ $16 per hour. Using marginal​ analysis, by how many hours should Thuy Anh extend her flower​ shop's hours of​ operations?
In response to the Trump​ administration's trade policies and tax reductions offered by the state​ government, Taiwanese company Foxconn planned to build a factory in Wisconsin to manufacture LCD television screens. This is an example of Foxconn reacting to which of the three key economic​ ideas?
People respond to economic incentives.
Scarcity refers to the situation in which
unlimited wants exceed limited resources.
The basic economic problem of scarcity
has always existed and will continue to exist.
Economists assume that
optimal decisions are made at the margin.
Which of the following best describes an assumption economists make about human​ behavior?They assume that rational behavior is useful in explaining choices people make even though people may not behave rationally all the time.If the marginal cost for the U.S. Postal Service to deliver packages for Amazon on Sundays is estimated to be​ $250,000 per​ Sunday, then the U.S. Postal Service should make these Sunday deliveriesas long as the marginal benefit received each Sunday is just equal to or greater than​ $250,000.​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?yes, his marginal benefit is greater than his marginal costZane'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?He should finish the restoration and then sell the weather vane.