Exam 1: Ten Principles of Economics

Dee is an accomplished actress and a homeowner who pays a landscaper to maintain her lawn rather than do it herself. Dee has determined that she can earn more in the hour it would take her to work on her lawn than she must pay her landscaper. This scenario is an example of which principle of economics?

Which of the following is a subject that economists study?

In the early 1920s,

What term refers to the property that society has limited resources and therefore cannot produce all the goods and services people wish to have?

In the short run, an increase in the money supply is likely to lead to

Scarcity means that there is less of a good or resource available than people wish to have.

In a market economy, economic activity is guided by

Something that induces a person to act is called

Large or persistent inflation is almost always caused by

In a market economy, economic activity is guided by

An example of a firm with market power is a

Barb's aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is

Adam Smith's book The Wealth of Nations was published in

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

Melinda quits her job at a bank, which pays $30,000 a year, to enroll in a two-year graduate program. Her annual school expenses are $22,000 for tuition and fees and $2,000 for books. What is her opportunity cost of attending the two-year graduate program?

The government enforces property rights by

To say that government intervenes in the economy to promote equality is to say that government is aiming to

Rational people make decisions "at the margin" by comparing .

Suppose the state of Wyoming passes a law that increases the tax on cigarettes. As a result, smokers who live in Wyoming start purchasing their cigarettes in surrounding states. Which of the following principles does this best illustrate?

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