BAM223 Final Exam Latest
1. An economic ________ is a simplified version of some aspect of economic life used to
analyze an economic issue.
a. variable
b. market
c. model
d. trade-off
Scenario 1-2
Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of
$5,000 per week. The plant owner observes, “Although the last 300 hats we produced and
sold increased our revenue by $1,000 and our costs by $1,100, 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 hats.”
2. Refer to Scenario 1-2. Had the firm not produced and sold the last 300 hats, would its
profit be higher or lower, and if so by how much?
a. Its profit will be $1,100 higher.
b. Its profit will be $1,000 lower.
c. Its profit will be $100 lower.
d. Its profit will be $100 higher.
3. The term market in economics refers to:
a. a place where money changes hands.
b. a legal institution where exchange can take place.
1. An economic ________ is a simplified version of some aspect of economic life used to
analyze an economic issue.
a. variable
b. market
c. model
d. trade-off
Scenario 1-2
Suppose a hat manufacturer currently sells 2,000 hats per week and makes a profit of
$5,000 per week. The plant owner observes, “Although the last 300 hats we produced and
sold increased our revenue by $1,000 and our costs by $1,100, 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 hats.”
2. Refer to Scenario 1-2. Had the firm not produced and sold the last 300 hats, would its
profit be higher or lower, and if so by how much?
a. Its profit will be $1,100 higher.
b. Its profit will be $1,000 lower.
c. Its profit will be $100 lower.
d. Its profit will be $100 higher.
3. The term market in economics refers to:
a. a place where money changes hands.
b. a legal institution where exchange can take place.
