Exam 1: Ten Lessons From Economics

In a market economy:

If the government prints too much money, it will cause inflation.

The phrase 'there's no such thing as a free lunch' refers to the concept of scarcity.

An example of an externality is:

For most students, from an economic point of view, the largest single cost of a university education is:

In a market economy a central agency decides how much goods and services should cost.

In economics, the cost of something is:

What would happen to the study of economics if scarcity disappeared?

When markets allocate resources efficiently and there are no market failures, the government should intervene.

Define opportunity cost.What is the opportunity cost of a forestry company planting an area with seedlings?

Society faces a trade-off between equity and efficiency because:

An employee outsourcing his own job is an example of an unexpected loss from trade.

The growth rate of a nation's productivity determines the growth of its average inflation rate.

Which of the following resources is least likely to meet the definition of scarcity?

Economics is defined as the study of:

One example of a centrally planned market is:

The classic trade-off between guns and butter refers to:

Aaron has bought a new television for $2000.He has just learnt that in a push to reduce household waste the government is giving $500 to people who have their televisions fixed, instead of throwing them out when they break and buying a new one.What might Aaron do?

Stan buys a 1966 Mustang with the intention of repairing, restoring and selling it.He anticipates that it will cost him $10 000 to purchase, repair and restore the car, and that he can sell the finished car for $13 000.When he has spent a total of $10 000 on the project, he discovers that he needs to replace the engine.It will cost Stan $4000 to replace the engine.He can sell the car without the new engine for $9000.What should he do?

Trade is about countries competing to export the most goods.