Exam 1: What Is Economics

A large factory pours its toxic wastewater into a nearby river, and as a result, the residents of a downstream community experience high rates of illness and birth defects.The economic problem illustrated by this example is

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

A large airline calculates that the additional cost of a having a passenger on a flight to the Bahamas as the cost of a bag of peanuts and a soft drink, which totals $1.50, but the airline's price is $600 for potential customers who want to buy vacant seats on the day of the flight.Which economic principle is this airline failing to utilize?

In contrast to the United States, the European Union has chosen

Models are used to describe cause-and-effect relationships.

In Egypt, in 1970, the Aswan Dam was completed.By preventing the annual flood of the Nile (thereby providing millions of acres of arable land) and by providing electricity, the dam was expected to raise the living standard of the Egyptian people-and it has.However, it has also led to a rise in the water table, which causes Egypt's limestone structures, including the pyramids, to absorb more salt water and to suffer serious erosion from crystallized salts.Combined with air pollution and traffic vibration, this erosion is turning the pyramids to dust.Economists analyze this type of problem with the concept of

Economic models are often expressed in

Slope is measured as rise/run.

Which of the following is one source of disagreement between economists?

When nations trade based upon comparative advantage, only one side of the transaction will benefit.

If an airline company has several empty seats on a flight and the full price of an air ticket is $500 and the marginal cost per passenger is $100, then it will be profitable for the airline to

A line that rises at a 45 degree angle has a slope of

When voluntary trade takes place,

The United States has chosen to balance the competing claims of efficiency versus equality by emphasizing greater efficiency over greater equality.

The market mechanism provides a financial incentive for firms to minimize the pollution they create.

Externalities are created when parties not involved in an economic transaction are affected by it.

To analyze policy options, economists are forced to deal with

Airlines can use marginal analysis to set ticket prices, which can increase profits for the company.

Economic theory simplifies relationships to explain how the relationships interact.

Rational choice requires that opportunity cost be