Exam 1: Ten Lessons From Economics

An externality is the impact of:

Monopoly power and income inequality are examples of market failure.

Suppose you got out to lunch with your wealthy but boring uncle. He pays for your meal. Does this violate the economic concept that 'There is no such thing as a free lunch'?

Which of the following is a major area of study for economists?

What is the general rule for rational decision making?

The income of a typical worker in a country is most closely linked to which of the following?

Inflation increases the value of money.

From an accounting point of view, the largest single cost of a university education for most students is:

A good example of a monopoly is:

Which of the following is an example of market failure?

Equity means that:

Which is the most accurate statement about trade?

Taxing high incomes at a higher rate than low incomes is most likely to do which of the following?

Better tools and technology can increase productivity and therefore living standards in countries.

Governments can improve efficiency in an economy by intervening when the richest companies are not paying enough out to shareholders

People are likely to make good decisions only if they understand the options that are available to them.

Which of the following tends to decrease productivity?

Pollution regulations make society better off by raising incomes.

A rational decision maker takes an action only if the:

Economist Sam Peltzman found that seatbelt laws caused less accidents and more pedestrian deaths.