Exam 1: Economics and Economic Reasoning

Brooke and Sandy both attend the same college and have the same expenses for tuition, books, and supplies. However, Brooke is a famous actress who could earn $2 million per year if she were not attending college whereas Sandy could earn $10,000 a year serving hamburgers if he were not attending college. It follows that the opportunity cost of attending college:

Applying the concept of opportunity cost to the pollution of a lake, an economist probably would conclude that:

The price of a new model of iPad tends to fall significantly a year after it is introduced. Suppose Jane bought an iPad as soon as it was introduced (a year ago)and paid a premium price for it. Now she wants to buy an iPad cover. Which of the following should she consider before buying the new accessory?

Based on scientific nutritional studies, in most countries an income of $1 a day does not provide sufficient food, shelter, and clothing to live. Under these conditions the medical risk of death is high. This statement is:

The statement "government should provide affordable health care coverage for every member of society" is:

What is economic reasoning? Give an example.

"Price controls in competitive markets cause shortages" is an example of:

The study of individual choice is a focus in:

What are the three forces that control economic reality? Give an example of each.

The fact that the price of a gallon of milk is likely to be more expensive at a convenience store than at a supermarket is an example of:

The marginal cost of consuming another unit of a good:

Value judgments in economics:

Chuck offers $240,000 for a house. The seller turns down the offer but says she will sell the house for $260,000. However, Chuck refuses to pay the higher price. If Chuck is following the economic decision rule, the marginal benefit of the house to:

Economic forces:

What is scarcity? Why is it so difficult to eliminate it?

Using the impartial spectator tool, one arrives at normative judgments based on your estimation of:

A theorem is:

The answers to an economy's three central economic problems are determined by the interaction of three forces: economic forces, political forces, and social forces.

You have just finished paying off the $10,000 loan on your car,and it stops working.Your mechanic tells you that it will cost $1,000 to repair it.Your car is quite old and you are hesitant to put another $1,000 into it.Instead,you are contemplating purchasing a much newer car for $15,000.You want to get your wheels back.What should you do? How would your answer change if you took the expected life of the vehicle into consideration? NOTE: Answer this question by applying the economic decision rule.

As newly elected President of your school's Economics Club,you must prepare the Club's annual budget of $5,000.Past budgets have included: 1)fees for guest speakers;2)tours of local businesses;3)charges for downloading economic statistics;4)an end-of-semester party;and 5)the Club President's salary.How would the central coordination problems faced by any economic system apply to your task of deciding how to allocate the $5,000?