Exam 1: Ten Principles of Economics

The term ______ refers to the size of the economic pie, and the term ______ refers to how the pie is divided.

Making rational decisions at the margin means that people

The basic principles of economics suggest that

What is another word for "marginal"?

Your professor loves her work, teaching math. She has been offered other positions in the corporate world that would increase her income by 15 percent, but she has decided to continue working as a professor. Her decision would not change unless the marginal

Dale is a guitar teacher and Terrence is a tile layer. If Dale teaches Terrence's daughter to play the guitar in exchange for Terrence tiling Dale's kitchen floor,

The opportunity cost of an item is

In a market economy, economic activity is guided by

The willingness of citizens to pay for vaccinations does not include the benefit society receives from having vaccinated citizens who cannot transmit an illness to others. This extra benefit society gets from vaccinating its citizens is known as

In a particular country in 1998, the average worker needed to work 25 hours to produce 40 units of output. In that same country in 2008, the average worker needed to work 40 hours to produce 68 units of output. In that country, the productivity of the average worker

When the government prevents prices from adjusting naturally to supply and demand, it

Explain how an attempt by the government to lower inflation could cause unemployment to increase in the short-run.

A worker in Thailand can earn $12 per day making cotton cloth on a hand loom. A worker in the United States can earn $82 per day making cotton cloth with a mechanical loom. What is the likely explanation for the difference in wages?

In the short run, an increase in the money supply is likely to lead to

Which of the following firms is likely to have the greatest market power?

Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

A market economy cannot produce a socially desirable outcome because individuals are motivated by their own selfish interests.

Give an example of government intervention that is intended to improve equality.

Consider two countries, Muria and Zenya. In Muria total annual output is worth $800 million and people work 40 million hours. In Zenya total annual output is worth $900 million and people work 50 million hours. In which country is productivity higher?