Exam 1: Ten Principles of Economics

One effect of the government-imposed seat belt law in the U.S. has been

Because resources are scarce, a society cannot give all individuals the standard of living to which each aspires.

Government policies resulting in reduced efficiency include (i) the welfare system (ii) unemployment insurance (iii) progressive income tax

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

The business cycle refers to fluctuations in economic activity such as employment and production.

The term "productivity"

A rational decision maker takes an action if and only if

One of the effects of gas prices rising from about $2 to about $4 per gallon was airlines ordering new, fuel-efficient aircraft.

Economists use the word equality to describe a situation in which

Prior to the collapse of communism, communist countries worked on the premise that economic well-being could be best attained by

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

A tax on gasoline is an incentive that encourages people to drive smaller more fuel-efficient cars.

A tax on gasoline encourages people to drive smaller, more fuel-efficient cars. Which principle of economics does this illustrate?

Economics is the study of how society manages its

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

A construction company has built 30 houses so far this year at a total cost to the company of $7.5 million. If the company builds a 31st house, its total cost will increase to $7.76 million. Which of the following statements is correct?

Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is

The irregular and largely unpredictable fluctuations in economic activity are called

What does the term "marginal change" mean?

The amount of goods and services produced from each unit of labor input is called