Exam 1: What Is Economics

The marginal cost of an airline ticket is the total cost of flying the plane divided by the number of passengers.

It has been found that people die at a much higher rate in hospitals than in most other environments,leading some to conclude that hospitals cause death.What is the problem with this reasoning?

In 1980,in order to stimulate agricultural production,Fidel Castro allowed Cuban farmers to sell their goods directly to consumers and keep whatever profit they made.Some farmers were earning $50,000 per year,compared with the average worker income of $2,400.The workers resented this.Castro denounced the farmers as "capitalist gangsters" and closed the free markets.Cuban cash income declined five percent and fresh vegetables were in short supply.This illustrates the economic concept of the

The 1981 tax reform act reduced taxes on high-income individuals.Many economists believed that high tax rates would deter high-income individuals from working and investing,thus slowing the growth of income.This illustrates the issue of

Unemployment and inflation are important determinants of short-run material welfare,whereas productivity growth is an important determinant of long-run material well-being.

Figure 1-2 -Identify the slope of the two curves A and B in Figure 1-2.

Economic models

One of the consequences of preventing wages from falling in the European Union has been growing unemployment.

Slope is measured as rise/run.

A diagram is a good example of a(n)

The United States produces both automobiles and computers more efficiently than Mexico.Nevertheless,it is possible that both nations would benefit from trade in these items.The reason for this is

What is the appropriate degree of abstraction?

Some college students think that because a college degree greatly increases their earning potential there is no opportunity cost of attending college.How would an economist look at the matter?

The United States has been willing to trade off greater efficiency for greater wage equality.

Rent control is usually justified on the grounds that it protects moderate- to low-income families from the burden of rapidly rising rents and from eviction if they are unable to pay.It also prevents landlords from reaping windfalls as property values rise.Opponents note that rent controls usually lead to a reduced supply of rental housing and shortages.The proponents of rent controls support them primarily on the grounds of

Individuals will have different value judgments about the appropriate rate of unemployment and the appropriate rate of inflation.

The opportunity cost to you of an action is

Economic analysis and policy are made more difficult by

The word "theory" means the same to the scientist as it does to the man on the street.

It is possible to represent three dimensions on a two-dimensional graph by using