Exam 1: Ten Principles of Economics

Larissa has spent $480,000 purchasing and repairing an old century home, which she expects to sell for $520,000. She discovers that she needs an additional repair, which will cost $80,000. She can sell the house as it is now for $460,000. What should she do?

If education produces external benefits for society, what might NOT be an appropriate policy for society to establish regarding education?

What are two causes of market failure?

Guns and butter represent the classic societal tradeoff between spending on which two items?

Which word comes from the Greek word for "one who manages a household"?

When and where did one of the worst episodes of inflation occur?

What happened to prices in Germany during the early 1920s?

If an externality is present in a market, what may enhance economic efficiency?

What does the tenth principle of economics help explain?

With the understanding that people respond to incentives, outline the possible outcome for teachers if the K-12 school year is extended to 11 months per year instead of the existing 10 months per year.

What is an example of an externality?

In economics, what is the cost of something?

What happens when government policies are being designed?

What does the saying "There is no such thing as a free lunch" mean?

Why would Adam Smith love Uber?

Productivity is defined as the quantity of goods and services produced from each hour of a worker's time.

Which term refers to a single entity that has the ability to influence market prices?

What term refers to a situation in which markets fail to allocate resources efficiently?