Exam 1: Ten Principles of Economics

Suppose the state of Massachusetts passes a law that increases the tax on alcoholic beverages. As a result, residents in Massachusetts start purchasing their alcohol in surrounding states. Which of the following principles does this best illustrate?

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

Bridget drinks three sodas during a particular day. The marginal benefit she enjoys from drinking the third soda

The fact that different countries experience different standards of living is largely explained by differences in those countries'

In a particular country in 2000, the average worker needed to work 40 hours to produce 55 units of output. In that same country in 2008, the average worker needed to work 30 hours to produce 45 units of output. In that country, the productivity of the average worker

Which of the following is not an example of a group responding to an incentive?

Large or persistent inflation is almost always caused by

Senator Bright, who understands economic principles, is trying to convince workers in her district that trade with other countries is beneficial. Senator Bright should argue that trade can be beneficial

Economics is the study of how society allocates its unlimited resources.

Oil is considered to be a non-renewable energy source. Oil

If the United States decides to trade with Mexico, we know that

The idea that only the government can organize economic activity in a way that promotes economic well-being for a country as a whole

The term used to describe a situation in which markets do not allocate resources efficiently is

Suppose a typical worker in India can produce 32 units of product in an eight-hour day, while a typical worker in Bangladesh can produce 30 units of product in a 10-hour day. We can conclude that

Which of the following would a permanent increase in the growth rate of the money supply change permanently?

If an externality is present in a market, economic efficiency may be enhanced by

Communist countries worked on the premise that government officials were in the best position to allocate the economy's scarce resources.

You have eaten two bowls of ice cream at Sundae School Ice Cream store. You consider eating a third. As a rational consumer you should make your choice by comparing

Brenda is an excellent baker and Floyd has a plentiful farm. If Floyd trades eggs and butter to Brenda for some of Brenda's bread and pastries,

Approximately what percentage of the world's economies experience scarcity?