Exam 1: Ten Principles of Economics

The cost of an action is measured in terms of foregone opportunities.

One reason we need government,even in a market economy,is that

As a result of a successful attempt by government to cut the economic pie into more equal slices,

For society,a good is not scarce if

A typical society strives to get the most it can from its scarce resources.At the same time,the society attempts to distribute the benefits of those resources to the members of the society in a fair manner.In other words,the society faces a tradeoff between

In a particular country in 1995,the average worker needed to work 25 hours to produce 40 units of output.In that same country in 2005,the average worker needed to work 40 hours to produce 68 units of output.In that country,the productivity of the average worker

Based on what we know about the effects of mandatory seat belt laws,which of the following groups would be most likely to mount a campaign to repeal those laws?

Which of these activities will most likely result in an external benefit?

Government spending is the ultimate source of inflation.

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

Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?

People are willing to pay more for a diamond than for a bottle of water because

The principle that "people face tradeoffs" applies to

Which of the following is true?

When the government implements programs such as progressive income tax rates,which of the following is likely to occur?

A primary function of prices in a market economy is to provide participants with

An example of an externality is the impact of

Since taxes affect only the price paid by the buyer,they cannot have an adverse impact on the allocation of society's resources.

A person's willingness to pay for a good is based on

Which of the following principles is not one of the four principles of individual decisionmaking?