Exam 1: Ten Principles of Economics

Candice is planning her activities for a hot summer day. She would like to go to the local swimming pool and see the latest blockbuster movie, but because she can only get tickets to the movie for the same time that the pool is open she can only choose one activity. This illustrates the basic principle that

Suppose your college institutes a new policy requiring you to pay for a permit to park your car in a campus parking lot.

The government can potentially improve market outcomes if market inequalities or market failure exists.

Which is the most accurate statement about trade?

Savion is restoring a car and has already spent $4,000 on the restoration. He expects to be able to sell the car for $5800. Savion discovers that he needs to do an additional $2,400 of work to make the car worth $5,800 to potential buyers. He could also sell the car now, without completing the additional work, for $3,800. What should he do?

What does the "invisible hand" refers to?

Scenario 1-3 It costs a company $35,000 to produce 700 graphing calculators. The company's cost will be $35,070 if it produces an additional graphing calculator. The company is currently producing 700 graphing calculators. -Refer to Scenario 1-3. What is the company's average cost?

The ability of an individual to own and exercise control over scarce resources is called

Suppose the government taxes the wealthy at a higher rate than it taxes the poor and then develops programs to redistribute the tax revenue from the wealthy to the poor. This redistribution of wealth

Inflation is the primary determinant of a country's living standards.

Government policies that improve equality usually increase efficiency at the same time.

Scenario 1-4 You have the afternoon free. You have a choice between going to the movies with a friend or studying economics for three hours. If you go to the movies, you will spend $12.00 on a ticket and $4.75 on popcorn. If you choose to study economics for three hours, you will raise your exam grade by 15 points. -Refer to Scenario 1-4. What is your opportunity cost of studying economics?

A rational decisionmaker

Consider Miray's decision to go to college. If she goes to college, she will spend $24,000 on tuition, $12,000 on room and board, and $1,900 on books. If she does not go to college, she will earn $16,000 working in a store and spend $8,000 on room and board. Miray's cost of going to college is

Tracy quits her job, which pays $25,000 a year, to finish her college degree. Her annual college expenses are $12,000 for tuition and fees and $1,000 for books. What is her opportunity cost of attending college for the year?

Productivity is defined as the

The terms equality and efficiency are similar in that they both refer to benefits to society. However, they are different in that

Resources are

Economists use the term ______ to refer to a situation in which the market on its own fails to produce an efficient allocation of resources.

Which of the following statements about trade is false?