Exam 1: Ten Principles of Economics

The marginal benefit Colin gets from eating a fourth slice of pizza is

After much consideration, you have chosen Cancun over Ft. Lauderdale as your Spring Break destination this year. However, Spring Break is still months away, and you may reverse this decision. Which of the following events would prompt you to reverse this decision?

In a market economy,

The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the

An individual deciding how to allocate her limited time is dealing with both scarcity and trade-offs.

The "broken window fallacy"

When society requires that firms reduce pollution, there is

Economists are particularly adept at understanding that people respond to

Which of the following statements about trade is false?

The invisible hand refers to

In the United States, incomes historically have grown about 2 percent per year. At this rate, average income doubles every

For a number of years country A had inflation of 3% but for the last five years has had inflation of 6%. Country B had inflation of 4% for many years, but very recently inflation unexpectedly rose to 9%. Other things the same, in which of the countries would the higher inflation rate be more likely to reduce unemployment?

The invisible hand works to promote general well-being in the economy primarily through

For markets to work well, there must be

Denise decides to spend three hours working overtime rather than watching a video with her friends. She earns $10 an hour. Her opportunity cost of working is

If a paper factory does not bear the entire cost of the pollution it emits, it will

A rational decisionmaker takes an action if and only if

In less than two years in the early 1920s, the cost of a German newspaper rose from 0.30 marks to 70,000,000 marks. This is a spectacular example of

Prices usually reflect

The overriding reason why households and societies face many decisions is that