Exam 1: Ten Principles of Economics

Tom is restoring a car and has already spent $3500 on the restoration.He expects to be able to sell the car for $5000.Tom discovers that he needs to do an additional $2000 of work to make the table worth $5000 to potential buyers.He could also sell the car now,without completing the additional work,for $2800.What should he do?

In the United States,incomes have historically grown

To promote good economic outcomes,policymakers should strive to enact policies that

The principle that trade can make everyone better off applies to

Suppose that the Federal Reserve Bank announces that it will be making a change to a key interest rate to increase the money supply.This is likely because

The mainstream view among economists is that

Stan buys a 1966 Mustang for $2,000,planning to restore and sell the car.He goes on to spend $8,000 restoring the car.At this point he can sell the car for $9,000.As an alternative,he can spend an additional $3,000 replacing the engine.With a new engine the car would sell for $12,000.Stan should

Suppose your management professor has been offered a corporate job with a 30 percent pay increase.He has decided to take the job.For him,the marginal

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

In the United States,the overall level of prices more than doubled during the

What you give up to obtain an item is called your

When the government redistributes income from the wealthy to the poor,

A marginal change is a

Following the implementation of laws requiring automobiles to have seat belts,which of the following occurred?

If the average cost of transporting a passenger on the train from Chicago to St.Louis is $75,it would be irrational for the railroad to allow any passenger to ride for less than $75.

Suppose that the average income of a Kenyan is higher than the average income of a South African.You might conclude that

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

Economists use the word equality to describe a situation in which

The U.S.president who referred to inflation as "public enemy number one" was

For a very long time Tropicland has had inflation of 12%.Suddenly its inflation rate drops to 4%.The drop in the inflation rate