Exam 1: Ten Principles of Economics

Suppose the cost of flying a 200-seat plane for an airline is $100,000 and there are 10 empty seats on a flight. If the marginal cost of flying a passenger is $200 and a standby passenger is willing to pay $300, the airline should

Trade allows each person to specialize in the activities he or she does best, thus increasing each individual's productivity.

The property of society getting the most it can from its scarce resources is called

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Scenario 1-5 Suppose that you have a choice between going to the movies with a friend for three hours or working at your job. If you go to the movies, you will spend $12 on a ticket and $6 on popcorn. If you choose to work, you will earn $10 an hour. -Refer to Scenario 1-5. What is your opportunity cost of going to the movies?

Suppose that you have received $650 as a birthday gift. You can spend it today or you can put the money in a savings account for a year and earn 2 percent interest. The opportunity cost of spending the money today, in terms of what you could have after one year, is

Market power and externalities are two possible causes of market failure.

Scenario 1-2 Suppose that you have a choice between going to the movies with a friend for two hours or working at your job. If you go to the movies, you will spend $7 on a ticket and $5 on popcorn. If you choose to work, you will earn $10 an hour. -Refer to Scenario 1-2. What is your opportunity cost of working?

Prices direct economic activity in a market economy by

Fossil fuels are considered to be nonrenewable energy sources. Which of the following statements is correct?

Which of these activities will most likely impose an external cost?

A marginal change is a small incremental adjustment to an existing plan of action.

The business cycle refers to fluctuations in economic activity such as employment and production.

Savion's aunt gave him $25 for his birthday with the condition that Savion buys himself something. In deciding how to spend the money, Savion narrows his options down to four choices: Option 1, Option 2, Option 3, and Option 4. Each option costs $25. Finally, he decides on Option 2. The opportunity cost of this decision is

Suppose that in Peru total annual output is worth $750 million and people work 40 million hours. In Oman, total annual output is worth 650 million and people work 20 million hours. Productivity is higher

If wages for accountants rose, then accountants' leisure time would have a lower opportunity cost.

Dee is an accomplished actress and a homeowner who pays a landscaper to maintain her lawn rather than do it herself. Dee has determined that she can earn more in the hour it would take her to work on her lawn than she must pay her landscaper. This scenario is an example of which principle of economics?

What term refers to the idea that society has limited resources and therefore cannot produce all the goods and services people wish to have?

A donut shop sells fresh-baked donuts from 6 a.m.until 5 p.m.every day.The shop does not sell day-old donuts, so all unsold donuts are thrown away at 5 p.m.each day.The cost of making and selling a dozen donuts is $1; there are no costs associated with throwing donuts away.If the manager has seven dozen donuts left at 4 p.m.on a particular day, which of the following alternatives is most attractive?

When society requires that firms reduce pollution, there is