Exam 1: Ten Lessons From Economics

An electronics store usually sells televisions for $1000 but business has been slow and it needs to sell them before the new model comes out.The shop buys the televisions in bulk for $550 each.The manager estimates they can only sell the old televisions for $375 each.What should the store do?

Jack must decide whether to go skiing or work on the weekend.He decides to go skiing, which costs him $500.His opportunity cost of going skiing is:

The opportunity cost of consuming a unit of good X is the amount of resources that must be devoted to its production.

The opportunity cost of going to university is:

Inflation in an economy is primarily caused by profiteering by greedy firms.

The government is considering investing in two policies aimed at increasing the productivity of the healthcare system.The first policy reduces the cost of doing a medical degree.The second invests in a new IT system for managing patient records.What is the government trying to achieve with each policy? What incentives is it creating?

Australian government policies announcing when changes to child benefits would occur had no effect on the decision around timing of some Australian families to have babies.

With careful planning, we can usually get something that we like without having to give up something else that we like.

The opportunity cost of something refers to the price you pay to get it.

While the 'invisible hand' cannot guarantee efficiency, it is better at guaranteeing equity.

Productivity is defined as the quantity of goods and services produced from each hour of a worker's time.

To increase living standards, the most appropriate public policy measure is to:

Equity means that everyone in the economy should receive an equal share of the goods and services produced.

For society, a good is not scarce if:

Coordination of economic activity in a market economy is achieved by:

Adam Smith used the term 'invisible hand' in his 1776 book The Wealth of Nations.Prices are the instrument with which the 'invisible hand' directs economic activity in a market economy.Explain.

In what case can a government's attempt to lower inflation and promote increased barrier-free trade have long-term consequences on unemployment?

When government policies are being designed:

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

The word 'economy' comes from the Greek word for 'one who manages the government'.